ASCM Insights

A Big Week

Fri, 22 Jan 2021 00:00:00 -0600

This has been an eventful week for those of us in the United States. Shortly after being sworn in as the 46^th president on Wednesday, President Biden signed 17 executive orders — more than any previous modern president.

It’s also been a momentous week for supply chain professionals. On Day 2, Biden signed the Executive Order on a Sustainable Public Health Supply Chain. It includes a Pandemic Supply Chain Resilience Strategy to design, build and sustain “long-term capability in the United States to manufacture supplies for future pandemics and biological threats.” The plan includes:

mechanisms to respond to emergency supply needs
an analysis of the role of foreign supply chains in America’s pandemic supply chain, as well as options for strengthening and better coordinating global supply chain systems
mechanisms to address points of failure in supply chains and to ensure necessary redundancies
approaches to assess and maximize public-private partnerships and federal investments in latent manufacturing capacity
a multi-year implementation plan for domestic production of pandemic supplies.

To achieve these goals — and vaccinate 100 million Americans in 100 days — Biden has invoked the Defense Production Act. It will be used to help his COVID-19 response team figure out the logistics of delivering vaccines to hospitals, doctors’ offices and pharmacies across the country — as well as shoring up the supply of shots, masks, PPE, syringes, vials, dry ice and other cooling equipment to transport millions of doses.

In addition, Biden has named three officials to his supply chain task force, who will be responsible for coordinating supply chain strategy: Bechara Choucair; Carole Johnson; and Tim Manning. As supply coordinator, Manning is tasked with identifying potential vaccine- and testing-related supply shortages. A former deputy administrator of the Federal Emergency Management Agency, he will also have the ability to evoke the Defense Production Act to spur production.

Manning will “coordinate the federal effort focused on securing, strengthening and ensuring a sustainable pandemic supply chain,” according to a press release by the Biden-Harris transition team.

On Inauguration Day, the nation also rejoined the World Health Organization (WHO), adding the United States to the global pandemic response. A key shift in health policy, this move also supports the coordinated task force created by the United Nations and supported by the WHO, which ensures the rapid production of PPE and the distribution of materials to cooperating countries across the world.

In addition, Biden fulfilled his promise to immediately rejoin the legally binding Paris Agreement. It was a signal to the world that his administration is serious about slowing climate change and creating more sustainable business practices.

It’s also incredibly significant that Vice President Harris became the first woman and woman of color in the White House. As I wrote last week, a shocking 100% of jobs lost in December 2020 were held by women, who are a key part of a functioning supply chain for businesses around the globe. Biden’s $1.9 trillion relief bill includes $416 billion for the vaccination program and a plan to reopen schools.

Getting school-aged children safely back to in-person schooling will hopefully lift the burden on millions of parents struggling to manage work and childcare, freeing them to return to jobs many of them have left unwillingly. While kids back at school won’t be a panacea for unemployed women, it will be a major step in the right direction.

Here at ASCM, we have long known the power of supply chains to make an impact. Now, with the Executive Order on a Sustainable Public Health Supply Chain putting our industry in the spotlight once again, it’s time to turn these visions into reality. When we work together, there’s no doubt in my mind that we can address critical global challenges, achieve brighter futures and create a better world through supply chain.

COVID-19 Continues Its Assault on Working Women

Fri, 15 Jan 2021 00:00:00 -0600

There was a shocking headline in Fortune earlier this week: Women accounted for 100% of the 140,000 jobs shed by the U.S. economy in December. “Actually, it’s even worse than that,” author Maria Aspan writes. “Technically, women accounted for more than 111% of jobs lost last month.”

A net 140,000 U.S. jobs disappeared in December, according to the Labor Department. Furthermore, analysis by the National Women's Law Center (NWLC) found that women lost 156,000 jobs while men gained 16,000. In all, 5.4 million women have been affected since February — equal to 55% of all U.S. jobs lost.

The U.S. Bureau of Labor Statistics points to two central reasons why the pandemic and resulting recession are so brutal to women: First, COVID-19 hammered sectors that are largely served by female workers, such as hospitality and retail. Second, ongoing school and daycare closures are keeping moms home to provide childcare and virtual learning supervision.

In fact, 2.1 million mothers have had to vacate the labor force, with only 22% of female workers having jobs that allow them to telecommute. Again, women in service-sector jobs are experiencing the worst of it, as these roles don’t lend themselves to telecommuting, especially while caring for children at home.

And the ramifications are poised to widen gender gaps and damage women’s financial security for years to come. The Center for American Progress reports that 4.5 million childcare slots could be lost permanently, giving moms little choice but to stay home.

“The risk of mothers leaving the labor force and reducing work hours in order to assume caretaking responsibilities amounts to $64.5 billion per year in lost wages and economic activity,” the report states. “Without both immediate and long-term action … the United States cannot achieve continued economic growth nor protect and advance gender equity.”

The Bureau supports this conclusion, stating that COVID-19 may erode gender norms, resulting in an ongoing uneven distribution of the division of housework and childcare.

“The longer you’re out of work, the more likely it is to depress your wages when you do get a job again,” says Emily Martin, vice president for education and workplace justice at the NWLC. “Women are in the bullseye of this pandemic.”

Help ASCM advance women through supply chain

Diversity of thought, influence and input — particularly from women — is crucial to today’s global supply chains. ASCM will continue working to educate, engage, promote and retain women in supply chain in numerous ways, and I sincerely hope you will get involved.

First, the ASCM Foundation is excited to announce a new partnership with the U.S. State Department President’s Emergency Program for AIDS Relief (PEPFAR) Dreams Initiative. This program will train a cohort of 300 young women in Zambia and South Africa to be the next generation of supply chain professionals.

Foundation Vice President Dan Schoenfeld writes in the latest SCM Now magazine: “As the ongoing demand for supply chain practitioners skyrockets, this is an amazing opportunity to close the supply chain skills gap. … Learners will participate in a 16-to-24-hour certificate experience to facilitate career opportunities in supply chain, with the strong potential for immediate employment.”

Second, ASCM has created an exclusive group for members to engage, share resources and ask questions with other supply chain professionals who support the advancement of women in supply chain. Visit the ASCM CONNECT Community, and join the disccussion.

In addition, a recent edition of The Rebound features Katty Kay, lead anchor for BBC World News America, discussing how businesses can address the changing nature of diversity in the workforce.

Perhaps most importantly, I urge you to reach out to young girls and women and show them what awaits them in a supply chain career. Tell them why you’re passionate about what you do. Share the myriad ways in which your job has a positive influence on people’s lives. We’re all in this together, and we can’t do it without empowered women.

Read the Brand-New Issue of SCM Now

Wed, 13 Jan 2021 00:00:00 -0600

Welcome to the first all-digital issue of SCM Now! After more than 30 years, ASCM’s flagship publication is now published right on our website, giving you access to award-winning supply chain content whenever and wherever you need it.

In addition, the publications team is producing SCM Now twice as often — bimonthly instead of quarterly — to keep the content as fresh and relevant as possible. This past year, it became increasingly clear that the global ASCM community wants and needs a continuous flow of essential supply chain information. And we responded. In fact, between the ASCM Insights blog and SCM Now magazine, ASCM members enjoyed nearly twice as many articles in 2020 as in 2019.

Now, we continue this trend with the brand new issue of SCM Now. Inside you will find:

Innovative models that can provide new dimensions to procurement decision-making
Strategies for calculating safety stock amid variable customer demand
An in-depth look at the potential for global growth post-pandemic
Reasons to adopt a more enthusiastic mindset when strategic planning
The rise of telehealth and what it means for health care and pharma

I look forward to hearing about your experience with the new digital format. Thank you for reading!

6 Ways to Advance Supply Chains Through Environmental Disclosure

Tue, 12 Jan 2021 20:00:00 -0600

Over the past few years, organizations around the world have made environmental innovation and disclosure a key part of their business models. The reasons are varied: Some companies care deeply about the climate change crisis and how it is rapidly changing human existence. Others realize that consumers today are more concerned about the environment – with many saying they are more likely to support businesses that exercise ethical environmental practices. Some governmental regulators have created stricter thresholds for businesses, such as emissions reduction or the proper disposal of waste. And stakeholders, including major shareholders, have a vested interest in companies disclosing their environmental impacts.

According to an October 2020 research article in ASCM’s Journal of Operations Management, “Environmental disclosure has been shown to impact firms’ reputation, value and performance.” In this context, environmental disclosure includes all information a business makes available about its environmental impacts and practices. Further, the study, “Administrative environmental innovations, supply network structure, and environmental disclosure,” finds that administrative environmental innovations (AEIs) are directly correlated with environmental disclosure. AEIs typically refer to plans or policies for the organization that quantify environmental impacts and create goals for managing effects, investing resources, tracking progress and course-correcting as necessary.

The incentive to increase environmental disclosure does not just affect consumers and shareholders; employees, managers and leaders are motivated to improve their organization’s environmental impact by the level of transparency. This, in turn, leads to greater disclosure. “AEIs can be expected to promote actions among organizational members through a combination of incentives, training, positive reinforcement, and corporate mandates … [which enhances] the tracking and reporting of environmental data and — coupled with external pressure from investors, regulators, and the public — can be expected to lead to greater environmental disclosure,” the study notes.

Investing in internal and external AEIs

The most important takeaway Bellamy, Dhanorkar and Subramanian advise for supply chain managers is to invest in both internal and external AEIs. They describe administrative innovations as new ideas that “involve significant changes in the routines used by the organization to deal with its tasks of internal arrangements and external alignments.” In this way, internal and external innovations are separate practices. Investing in either internal AEIs (within the business) or external AEIs (throughout the supply chain) resulted in increased environmental disclosure, but investing in both resulted in a more pronounced improvement in the level of disclosure due to the overlap in the capabilities needed to be cost-effective.

Some organizations may be more inclined to focus on internal innovations, so they can “demonstrate their environmental proactiveness without having to burden their supply networks or having to deal with the need to coordinate with external entities.” But this view is shortsighted. In fact, when organizations implement both internal and external forms of AEIs, there is a greater increase in environmental disclosure. Some of the capabilities required are complementary, such as “resource consumption and the volume and toxicity of waste and emissions.”

Additionally, implementing AEIs shapes attitudes within the organization, improving the opinions of employees, managers and leaders about the importance of practicing environmental sustainability and what kind of impact the business makes on the environment. According to the study’s authors, internal and external AEIs may be implemented by a top-level company to

manage compliance and costs of ever-changing governmental regulations
increase efficiency and resource productivity to improve the supplier’s cost structures
take advantage of any business opportunities and market share created by increased demand by customers, the public, and supply chain partners
prevent negative outcomes and risks from poor environmental practices, which damage both the business’s bottom line and its reputation with the public
improve the business’s branding and image with corporate partners and increase legitimacy with the public, government regulators, the media and industry associations.

Broader implications for supply chain management

What does all of this mean for supply chain managers who want to do what’s right for the environment — and their businesses? In the study, variables in the supply chain network that led to improved AEIs — accessibility, control and interconnectedness — are examined. From that, there is some key advice for supply chain managers aiming to increase their focus on the environment and sustainability: “The supply network for a typical consumer product accounts for more than 80% of the associated greenhouse gas emissions and more than 90% of the associated impacts on air, land, water, biodiversity and geological resources,” the study concludes. Working to reduce those numbers is a way for everyone, from CEO to management to employee, to make a positive impact on the environment and reduce climate change. Here’s how:

1. Relocate suppliers in the network. To start, managers can analyze the structure of their networks. The first variable of the supply chain network that the study authors examined was the network flow accessibility. They found that, the closer two firms or businesses are in the chain, the better the communication between them. This led to more environmental disclosure: “Firms with smaller geodesic distances in their supply network have greater network flow accessibility because they are more directly exposed to sources of information than firms with larger distances.” Essentially, businesses with fewer intermediate links between them and their suppliers are in a better position to learn environmental data faster and with fewer filters or constraints. So, managers who have the power to change a supplier to a business that is more closely aligned to their needs may have another incentive to do so.

2. Reevaluate suppliers in the network. The second variable that improved AEIs was supply network flow control. When determining whether a supplier is close enough within the network, managers will also benefit from evaluating whether the existing supply network characteristics are aiding in the implementation of AEIs and environmental disclosure. In other words, are the businesses within the network attempting to improve environmental practices? Organizations at the top of the supply chain can obtain information about environmental practices within their network, such as carbon emissions, hazardous materials use, and recycling and disposal of wastes, and act as “gatekeepers.” Gatekeeping firms can access “non-redundant environmental information across their upstream network” and have “greater leverage to extract pertinent information from diverse sources.” Managers might also identify more influential suppliers within the network that can augment environmental practices within the system.

3. Account for a broader array of stakeholders. When making decisions about the extent of environmental disclosure, any business is going to consider the major shareholders and investors. However, managers should broaden the stakeholders they consider when making decisions about the type of AEIs and the level of environmental disclosure. Stakeholders should include employees, customers, suppliers, industry leaders, communities, activists, government agencies and non-governmental organizations. The study authors point out that more than 80% of companies in the S&P 500 publish an annual sustainability report, demonstrating the importance of that information to a wide audience. And stakeholders do not differentiate between the businesses within the supply chain network when it comes to environmental implications; buyers and suppliers are given equal responsibility for ethical practices, which is an even greater reason for managers to examine their relationships up and down the chain.

4. Collaborate with suppliers. The third variable that increased disclosure was supply network interconnectedness. Supply chain managers can do more than just implement internal practices to improve environmental compliance; they can also collaborate with suppliers to establish environmental policies and systems to ensure both parties benefit from sustainable protocols. Similarly, network learning from the diversity of experiences of suppliers can be leveraged to generate knowledge and further environmental disclosure. In fact, as the study states, “research has shown that network learning can effectively complement and sometimes even substitute for an organization’s own lack of technological or managerial experience.” Great communication between the organizations leads to increased trust and a faster flow of information, leading to “knowledge spillovers” within the network. However, the authors warn that excessive interconnectedness can lead to the opposite effect, describing a “U-shaped” curve.

5. Communicate with the entire workforce. Implementing AEIs requires cooperation from employees at all levels throughout the organization. Leadership must implement environmental goal setting, training and auditing to ensure the company is following the guidelines set forth in the administrative plan. Communication must be consistent to work, and the communication of the policies, by its nature, affects employees’ willingness to follow the initiatives. Additionally, consistent communication inspires employees to share the values of the environmental implications, and internalize the importance of the results.

6. Incentivize management to engage employees. Management has a motivation to involve employees at every level of the planning process; in fact, if AEIs are integrated into quantifiable environmental goals in the managerial job descriptions, then management is incentivized to “involve employees in the accomplishment of these goals and provide related training, feedback, and recognition.” Incorporating environmental innovations into every task that employees carry out will increase the likelihood that those practices will become integrated into the jobs of everyone within the organization. Widespread adoption will potentially make environmental sustainability — and disclosure — an administrative habit.

From the Foundation: The PEPFAR Dreams Program

Tue, 12 Jan 2021 14:00:00 -0600

No matter what your industry vertical may be, the days of traditional business and business relationships are forever changed. In the age of COVID-19, many people have been displaced professionally, and there are tens of millions in need of opportunity.

The ASCM Foundation was established to maximize the extraordinary opportunity to create a better world through supply chain. The past year has been a call to action for our staff and membership. We have focused on collaborating with government, private foundations and public organizations in order to address pressing global challenges — with a specific focus on workforce development and building frontier and humanitarian supply chains.

When I joined ASCM as the vice president of the ASCM Foundation in May 2019, I never imagined the impact we would make in such a short period of time. Initiatives such as our Global Health Supply Chain Program in Africa, funded by the Bill and Melinda Gates Foundation, has created more effective and sustainable supply chains by training hundreds of local practitioners in the APICS body of knowledge. Our U.S. workforce development initiatives have provided certificate programs to people in underserved areas, with a focus on diversity and inclusion. And our work in STEM has taught children of all ages that even a lemonade stand has some complex supply chain challenges!

One program that I am particularly proud of is our partnership with the U.S. State Department President’s Emergency Program for AIDS Relief (PEPFAR) Dreams Initiative. This program will train a cohort of 300 young women in Zambia and South Africa to be the next generation of supply chain professionals.

Through PEPFAR, the U.S. government has invested more than $85 billion in the global HIV/AIDS response — the largest commitment by any nation to address a single disease in history. PEPFAR has saved more than 20 million lives, prevented millions of HIV infections and accelerated progress toward controlling the global HIV/AIDS epidemic. One of the best-documented ways to prevent young women in Africa from contracting this disease is to provide them with high-quality, good-paying jobs. As the ongoing demand for supply chain practitioners skyrockets, this is an amazing opportunity to close the supply chain skills gap with African women from the Dreams Program.

ASCM Foundation, The Dreams Team, local governance stakeholders and ASCM together enable skill-based training using two-to-four of the APICS Principles On Demand (POD) Foundational modules, a Principles instructor, and a local academic partner. Learners will participate in a 16-to-24-hour certificate experience to facilitate career opportunities in supply chain, with the strong potential for immediate employment. In fact, ASCM has more than 100 corporate members working in Zambia and South Africa. When these women complete their ASCM-recognized certificate program, I am confident they will find rewarding supply chain jobs with one of these members.

In addition, the ASCM Foundation and our partners pledge to provide these women with mentorships and networking opportunities — and we look forward to sharing their stories in SCM Now magazine and the ASCM Insights Blog as they begin their journeys as supply chain professionals.

ASCM and the ASCM Foundation are making an impact through supply chain. That impact comes in many forms; for now, I will be focused on providing workforce development opportunities to the incredible women in the Dreams Program through PEPFAR.

Long Road Ahead: Reviving Global Growth

Tue, 12 Jan 2021 00:00:00 -0600

Experience shows that during societal inflection points, such as a global pandemic, the hand of government becomes significantly heavier. Moreover, such interventions tend to reverberate long after the crisis subsides. Government has a profound influence on the competitive environment in which companies and their supporting supply chains operate. Understanding these influences will help supply chain professionals anticipate the myriad changes that will shape the post-COVID world.

History is replete with examples of pivotal disruptions that spurred a reframing of the role of government. The Great Depression led to a collection of programs known as the New Deal and was one of the reasons for the rise of fascism and the Nazi party, which led to World War II. World War II gave rise to new multinational organizations, such as the United Nations, the International Monetary Fund (IMF), and the North Atlantic Treaty Organization, as symbols of a “rules-based international order.”

A central theme of these global-scale changes was the return — or reinforcement — of big government. In his 1996 State of the Union address, President Bill Clinton declared, “The era of big government is over.” Although the United States never really had big government compared with other major countries, many big shocks to the system have expanded the role of the U.S. government through the years. For example, the Cold War triggered the construction of the Interstate Highway System; the September 11 attacks led to the creation of the Department of Homeland Security; and the 2008 financial crisis engendered acceptance of enormous deficits as the Federal Reserve (and other central banks) fought the financial meltdown.

COVID-19 is no different. To fight the economic effects of the virus, the U.S. Congress appropriated trillions of dollars for the biggest U.S. government spending program ever. The Federal Reserve launched an array of financial market interventions to inject more liquidity into the financial system. New laws mandated temporary prohibitions on evictions due to unpaid rent and provided the right to the forbearance of mortgage payments.

The United States was not alone in pumping unprecedented amounts of money into its economy, nor was its aid package the most generous. As of June 2020, the Japanese government’s stimulus package amounted to 21.1% of its gross domestic product, and Canada’s was 15%; the U.S. stimulus package was 13.2 percent.

Increased expectations of governments

These massive injections of taxpayer money into the economy accompanied a rise in government interventions. Some international leaders framed these actions as a response to a warlike crisis; others moved with warlike speed to solve social problems that had bedeviled their societies for many years. With the stroke of a pen, the city of London ended the problem of people sleeping on the streets by providing free hotel rooms, at state expense, to all those in need — 1,400 in all.

In implementing such changes, governments have likely increased expectations among their constituents. The result is the so-called Ratchet Effect, in which surges in government spending during a crisis do not taper back down afterward. Likewise, short-term regulation enacted in a crisis often lingers on the books long after life has returned to normal.

A 2019 Pew Research Center survey found broad support for maintaining or increasing a variety of government programs. The implication of this support is that, going forward, citizens will simply expect more from their governments in many facets of life.

Another area in which governments will increase involvement is setting industrial policy. The sad state of the World Trade Organization means that governments are likely to continue the beggar-thy-neighbor policies of tariffs and export restrictions to reduce their dependency on manufacturing in foreign lands. For example, Japan has a $2.3 billion fund to pay companies to leave China.

Governments also are likely to double down and intervene in purchasing and inventory policies, providing subsidies to industries considered critical, increasing buy local requirements and so forth. While some of these policies existed in the past, the type of manufacturing deemed essential to national security is likely to be much broader.

A growing web of regulation

Companies commonly interact with government agencies over regulatory issues, and these interactions could become more frequent as pandemic-inspired interventions increase. In the United States, a steadily accumulating body of regulations, such as the Sherman Antitrust Act (1890), Fair Labor Standards Act (1938), Consumer Product Safety Act (1972) and Food Safety Modernization Act (2011) have imposed a growing number of restrictions and obligations on businesses. These acts, plus innumerable other regulatory activities, have enlarged the accumulated corpus of U.S. federal regulations from 10,000 pages in 1950 to 186,000 pages in 2019.

Despite campaigning on an anti-regulation platform, the Trump administration wrote nearly 200,000 pages of new language in its first three years, and the total body of regulatory code at the end of 2019 was no smaller than it was at the end of the Obama administration in early 2017.

Other governments are not far behind. Since the Treaty of Rome in 1957, which created the European Economic Community (a forerunner of the European Union), the European Union has adopted more than 100,000 legislative acts, including directives, regulations and decisions.

The size of the regulatory system will inevitably increase in response to the pandemic and as the country recovers from the crisis. Future regulations that affect businesses might appear in areas such as customer data privacy, autonomous vehicles (both on the ground and in the air), trade, cybersecurity, gig-economy labor and the environment. The direction and nature of some future regulations — such as on trade or the environment — may go in diametrically opposite directions in different countries as well as in the aftermath of the new U.S. administration taking office in 2021. The growing complexity of technology, business and world affairs will likely spur a growing complexity in regulations.

The bottom line

Taxation is another area where the public and private sectors interact. Given the parlous state of government finances in the aftermath of the pandemic, companies can expect the tax burden to increase. “The steep contraction in economic activity and fiscal revenues, along with the sizable government support, has further stretched public finances, with global public debt projected to reach more than 100 percent of GDP this year,” the IMF said in its “World Economic Outlook Update” in June 2020. As of mid-May 2020, the G10 countries, plus China, had unveiled an estimated $15 trillion in combined stimulus spending and loan guarantees, with more stimulus in sight as COVID-19 showed signs of resurgence. Average financial liabilities in the countries making up the Organisation for Economic Co-operation and Development are also expected to rise considerably.

While many governments may have ambitious spending plans — be it the Green New Deal, new social protections or a beefed-up military — the money may not be there. In the United States, state and local governments cannot borrow money to handle increased spending and decreased tax revenues. Most must balance their budgets, which forces them to either cut spending or raise taxes and fees during a crisis. Similarly, developing countries face constraints tied to high sovereign debt levels even before the pandemic struck. Servicing the preexisting debt constrains what these countries can do to recover from the pandemic and damages their long-term financial stability.

Ultimately, government debts must be unwound via taxes, inflation or default. All three strategies can have negative effects on future economic growth. Even if countries choose to roll these debts over in perpetuity, the interest payments will be money the government must extract from someone but which they cannot use for other beneficial purposes. Thus, post-pandemic, one can expect a period of slower growth around the world.

This topic is discussed in-depth in the new book by Yossi Sheffi, “The New Ab[Normal]: Reshaping Business and Supply Chain Strategy Beyond Covid-19,” available on Amazon.com.

Integrated Asset Management: Where Maintenance Meets Supply Chain

Tue, 12 Jan 2021 00:00:00 -0600

Work-execution-management planning and condition-based maintenance are getting a lot of attention these days — as well they should. The internet of things combined with big data analytics and artificial intelligence are enabling supply chain professionals to focus on what will or might happen, rather than firefighting machine failures. It has never been easier to establish failure modes before they manifest as downtime.

A good maintenance strategy lays out when mandatory and preventive maintenance will be scheduled and suggests how resources should be deployed to identify failure modes and when interventions must be taken to maintain uptime. Ensuring that your maintenance strategy is attainable means having the skills, tools and asset availability to execute planned work in a timely manner. It also requires availability of the right parts and supplies. This is where maintenance meets supply chain — and integrated asset management is born.

But getting the right parts and supplies where and when they’re needed is more complicated than it sounds. It demands

parts and supplies that are clearly identified and described
easily accessible components stored in such a way that they won’t disappear, deteriorate or get damaged
inventories that can be deployed close enough to point-of-use to be available when required, yet managed centrally to minimize administrative costs and leverage stocking synergies
predictable, inexpensive deliveries that get supply where and when it is required
reasonable prices to drive longer asset life with an overall low cost of ownership.

Not long ago, many companies designed their own solutions to these challenges. They built maintenance shops with warehouses, then filled them with highly trained and equipped technicians, tools, testing equipment and inventories. Companies would keep their relationships with equipment suppliers at an arms length, which drove them to buy the recommended critical spares and subsequent original equipment manufacturer (OEM) parts to maintain their warranties.

These businesses worked with specialized distributors for consumables and other parts. They managed their own inventories, determined how and when deliveries would occur, and incurred extra costs when expedited deliveries were required. They leveraged their buying power with each of these players, who built in extra profit to the prices so they could “give back” in power-based negotiations. The ensuing ecosystems were nicely profitable despite high inventories and material handling costs.

A new approach

Today, operating models are driving a greater service component into OEM and distributor capabilities. Inventory is consigned or held further up the supply chain, where several customers can be protected with the same slow-moving critical parts and modules. Parts and supplies are being kitted to each major maintenance task, then sent back to be topped up. On-site storerooms are staffed by distributor personnel. Repair shops are staffed by OEM technicians. Commercial models are emerging through which customers only pay for equipment when it is available.

These new models dramatically change the nature of the commercial relationship via a more complex sharing of tasks, responsibilities and risks. As we advance maintenance practices and leverage advances in technology and thinking, we must change the way we think about the supporting supply chain. The role played by suppliers and the terms of engagement we employ will play an increasingly important role in determining the success of our integrated asset management strategy. This is dramatically changing the nature of supplier relationships and placing new challenges on how maintenance and supply chain managers work with suppliers. Getting things done through independent third parties will be a crucial challenge. Both maintenance and supply chain managers must adapt to these new realities.

Sourcing models framework

The University of Tennessee recently published research into how these new relationships can be managed. It focuses on how organizations buy rather than what they buy. This distinction is important, as it aligns with the category strategies that support the maintenance strategies. In an environment where the customer has complete control over equipment design, installation, modification and maintenance, the suppliers provide easily defined products and simple services to well-established service and quality levels. A highly defined, arms-length, key performance indicator (KPI)-driven approach typically works in these cases.

At the other end of the spectrum, where the outcome is strategically imperative to the customer, but the solutions are not well defined, a far more collaborative model is required. This can go as far as a joint venture with another organization that has complementary capabilities.

Table 1: Strategic Sourcing in the New Economy (used with permission)

Table 1 summarizes the key characteristics of the various models. Transactional relationships on the left are used for easily defined and specified goods and services with predictable outcomes. Approved vendors typically are vetted for basic risk through compliance to generic risk parameters (business continuity, performance, service, warranty) and may have conceded preferential terms (price, service) for repeat business. Preferred suppliers typically offer greater benefits, such as unique accommodations or innovations. In exchange for sustained business and priority access to new opportunities, preferred suppliers are expected to offer greater value through industry best practices that can be adapted to customer specific situations. These might include dedicated or consignment inventory, onsite staff, customized dashboards, or any number of innovative industry practices.

Performance-based agreements seek to achieve defined results through service-level agreements with qualified providers who have distinct competitive advantages, such as low-cost labor, specialized or dedicated systems or facilities, unique competencies, and less onerous regulations. These arrangements work well for situations that are well-defined and evolve gradually, where greater capability or effort can drive better performance that can be rewarded with monetary incentives and other motivations.

When the stakes are high — volatile, uncertain and strategically critical — and calling for unique and rare competencies, a highly collaborative relationship model may be appropriate. These relationships mobilize the best capabilities from the most qualified and capable service providers. Ongoing relationship management is principally concerned with how to handle the inevitable unexpected issues and opportunities. This is the most strategically integrated commercial model before financial control is exercised via joint ventures or shared service centers. It is also the riskiest, due to the uncertainty, high stakes and third-party management.

There is a significant challenge at many organizations to keep these models consistent internally. Some organizations are tempted to call their relationships collaborative and strategic; they manage the day-to-day operations following tactical KPIs that enact severe penalties for a failure to perform. There is little incentive for the supplier to outperform, bring their best ideas to the table or take any risk with the status quo. Other organizations may seek a collaborative relationship where there is limited benefit. No matter how much the parties share ideas, their activity just doesn’t warrant the effort.

As new business models emerge in integrated asset management, both suppliers and buyers are stretching the traditional transactional model. Becoming more collaborative to drive real competitive-differentiating innovation is imperative. The sourcing models in Table 1 provide a framework to chart how new commercial models can support your strategic intent in an internally consistent manner, which will align common sustainable interests; achieve meaningful goals; and ensure effective working relationships, management tools, and risk management.

In a tactical relationship, the quid pro quo is simple: The buyer pays a sum to secure a simple, defined product or service. The brand defines the quality, the price is posted, and consumer protection laws provide indemnity if something goes wrong. As a regular customer, you may be able to earn loyalty rewards or more lax returns privileges. You also have the power to rate the experience on product availability, choice, price and the pleasantness of the overall experience.

As the products and services become more complex and durable, the relationship must manage many more specifics and risks. What you buy is more closely related to the benefit you derive. Instead of supplying a spare part, your equipment is returned to a serviceable condition at an agreed price and timeframe. How this is achieved is less important. By working together, you can better predict activity levels and breakdowns. The supplier uses their depth of experience, capability and competency to perform the work better, faster and more cheaply. You share the benefits, and a failure to perform to a minimum standard can incur penalties. If the supplier performs over time, you may give them more business, lower the compliance burden or provide other benefits available only to trusted or long-term partners.

Now if you are pursuing goals that require you to engage the capabilities of a service provider with unique capabilities, you probably will want to use a relational model or a collaborative contracting approach. This involves the following:

Highly aligned objectives drive defined benefits for all parties; strategic and economic alignment is obvious. Incentives ensure everyone benefits from success and suffer from setbacks.
A collaborative governance model brings the right attention to issues as they arise. Focus is on joint success, not fixing blame, so there are only disadvantages in concealing or distorting problems.
The service provider was selected for their superior capabilities and competencies. They are free to work out how to achieve the objectives, and the buyer is committed to doing their share for the relationship to prosper and succeed. Success often means transformation of the status quo.
The relationship will probably have a limited duration, so an orderly exit plan is developed at the outset, allowing operational continuity and investments to be amortized.
Risk management goes beyond compliance to corporate enterprise risk management edicts of financial, business continuity, legal and trades requirements, as well as ethical and sustainability standards that are important for more tactical arrangements.

The greatest risks are executional: a failure to achieve those goals. Thus, the governance model must drive and maintain positive and open working relationships at every level, ensuring that everyone puts their best foot forward to help the relationship meet its ambitions. For this reason, collaborative contracting relationships often represent a microcosm within the greater organizations involved. Hence, most supply chains can only handle a handful of relationships and must focus on their most strategic initiatives requiring third-party involvement.

As integrated asset management drives new and more collaborative commercial models, organizations must learn to engage differently with their trading partners. The sourcing models framework can be used to structure these new relationships. Maintaining internal model consistency is paramount to ensuring the new commercial models perform.

Procurement and the Polarity Puzzle

Tue, 12 Jan 2021 00:00:00 -0600

Polarity management is the process of governing the relationship between two paradoxical challenges. In procurement, when cost is at one end of the polarity, any number of factors could be at the other: quality, quantity, consistency and so on. Perhaps the most difficult polarity to manage in procurement, however, is that of cost and relationships.

Most procurement organizations are focused on securing the best deal possible for their companies. In a world where metrics are required to measure outcome, the metrics for procurement organizations often fall to cost management. Focusing on cost (a tangible) can muddy the focus on value (largely an intangible). Focusing on cost distracts us from the relationship component, ultimately straining those relationships and forcing providers to sacrifice the very differentiators that offer value.

Additionally, many procurement organizations try to remove subjectivity from the purchasing decision in pursuit of a fair and impartial vendor selection. Objectivity is a good thing, but seeking it to the detriment of relationships is not. Instead, procurement professionals should pursue a mechanism that lets them measure the relationship health and incorporate that into their incentives, rather than just going for the best deal.

Let’s say a procurement manager works for a large company with a centralized procurement process that deals with operations at scale. If that company’s suppliers know the procuring company will always award bids to whichever supplier submits the least expensive request for proposal, those suppliers are incentivized to submit projects with the cheapest possible cost projections. This is true even if the propensity for low initial bids increases the likelihood of expensive change-orders or missed project deadlines. The procurement manager will achieve the goal of getting the lowest possible cost, but the method won’t really save the company any money.

This is where polarity management comes into play. Procurement managers have to do more than focus on achieving the lowest costs; they must reckon with how cost-controlling processes affect their relationships.

Precision through technology

Often, during the procurement process, interaction between the two businesses is kept to a minimum. This is a good way to avoid favoritism, but it further diminishes the value of relationships. An unbalanced cost-relationship polarity doesn’t simply incentivize negative behaviors, either; it can also leave even more value on the table. In fact, PwC notes in a 2019 white paper that supplier management can be procurement managers’ best bet in preventing “contract value leakage,” or lost value that comes from performance levels below what an original contract or bid projected. The paper also shows that procurement managers face an average of 25% value leakage in contracts.

Even if company executives take a dollars-and-cents approach to procurement, there’s a financial incentive to balancing pure cost control with better relationship management and analysis. The problem is that polarity management is tricky to put into practice. Procurement is difficult enough when the only objective is cost. That’s why procurement managers should supplement their efforts with new technology — not only for cost control and spending analysis, but also for more precise and effective management of procurement relationships.

The procurement industry has been slow to adopt new technologies. Research from Bain & Company found that less than 10% of companies in the procurement industry adopt established procurement solutions related to big data, the internet of things or blockchain technology. Even companies that think they’re adopting the latest data analysis technologies are rarely looking at the data through the lens of relationship health and mutual benefit. They might assess whether they’re getting the best price through market analysis or if the spend is in line with expectations. But reaching the next level requires leaping into new technologies, such as artificial intelligence (AI) and machine learning (ML).

Fortunately, AI and ML enable quick recognition of behavioral patterns that can potentially erode value or provide opportunities to cocreate value. These technologies also allow procurement managers to experiment with different approaches and compare results all the way through a project life cycle, such as by using A/B testing of procurement strategies to optimize relationships. AI and ML also help users manage intricate transactions that sometimes vary from instance to instance, identifying trends in behavior or patterns that emerge across systems.

In addition, by deploying the tools with the right data feeds (not just between company and vendor, but also within the market itself), these technologies support control over the polarity of objectivity and subjectivity. In essence, they become a system of checks and balances, helping to remove inadvertent bias.

A more holistic opportunity

Using a variety of models can provide new dimensions to the decision-making process. Each buying decision is a little different, so the models need the flexibility to weigh the importance of certain attributes. If there is a time-critical project, then a vendor known for on-time delivery might rank higher than a vendor that offers the lowest price. Where AI and ML come into play is by helping buyers see the relationships between these attributes and determine if decision criteria are correctly considered.

For example, a machine learning model could tell you that a particular vendor known for delivering on time more often than the competition also has an 80% chance of issuing change orders that increase the project’s overall cost. Yes, they get it done on time, but the final cost is unstable. On the other hand, that same model might tell you that the second-place vendor has a 30% chance of encountering time delays but historically takes on the costs of the overrun rather than burden the purchases with increasing cost. In this case, the project’s management team may be able to accept a 30% risk of time delays, given that the likelihood of staying on budget will decrease the chance that leadership will cancel the project due to cost pressures.

Interestingly, procurement is also often better equipped than other verticals in a company to deploy AI and ML. After all, the deep transaction history created by the supplier-relationship life cycle provides a rich source of data from which an algorithm can draw conclusions and insights. Once deployed, these solutions create a technological feedback loop than can make polarity management more seamless. An algorithm may reveal a potential solution, which then yields more data, which can suggest an even better solution.

In an ideal world, procurement managers would be able to have a full digital record of a product’s life cycle, from initial order all the way through fulfillment. Of course, the data surrounding those orders doesn’t always make its way cleanly through the system, and this creates uncertainty about whether orders are fulfilled correctly. On the other hand, a well-trained model can take all the disparate data and reconcile it, creating a more complete picture of order fulfillment from end to end. The result is a more efficient and cost-effective procurement system — exactly what everyone wants.

Be among the first to earn the new ASCM Supply Chain Procurement Certificate! The foundational program provides an overview of procurement fundamentals, sourcing strategies, supplier relationship management, negotiations, evaluation metrics and more.

4 Steps to Purposeful and Passionate Strategic Planning

Tue, 12 Jan 2021 00:00:00 -0600

Estimates show that the strategic plan failure rate is a whopping 50%-97%. Yet business gurus keep cranking out strategic planning books, and companies keep spending millions of dollars each year on internal strategy teams and management consultants. Why do we bang our heads against the wall? Why do we go down this rabbit hole with so little to show for it? Why do we keep doing the same thing over and over again, expecting different results?

One possible explanation is that we’re comfortable with the process. We find strategic planning reassuring, especially after a regime change. A new leader or leadership team begets a new plan. It’s only natural that these people think it’s necessary to make far-reaching changes if they want to make a name for themselves. No one has ever become famous by following the strategy of their predecessors. It’s the bold and exciting new ideas that get attention.

The problem, however, is with the planning. The reason is simple: Business leaders are problem-solvers; they’re always looking for solutions. Plus, they don’t like uncertainty. So, they see strategic planning as just another problem requiring a solution. When referring to strategy, the word “plan” is implied. Therefore, these leaders end up constantly developing strategic plans rather than concentrating on developing winning strategies.

According to Michael D. Watkins, a professor of leadership and organizational change, a strategy is a set of guiding principles that, when communicated and adopted by the organization, generates a desired pattern of decision-making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources to accomplish key objectives.

Additionally, the strategy should connect with and complement the organization’s mission, purpose and vision. It is, in effect, how to accomplish its goals. Strategies also should be somewhat nebulous and open-ended. They must consider numerous possibilities, known and unknown.

The APICS Dictionary defines strategy as how a company will function in its environment. Strategy specifies how to satisfy customers, grow the business, compete, manage, develop capabilities and achieve financial objectives. But it’s also essential to keep in mind that business strategy must connect to the organization’s purpose. This is what author and leadership expert Simon Sinek calls “the why.” Some like to think of a business’s why as its raison d’etre, French for reason for living. However, I believe the why should be a combination of purpose and passion. When there’s passion in one’s purpose and purpose in one’s passion, business objectives reach employees, customers, partners and all stakeholders on an emotional level. This creates loyalty, which has value beyond price.

Moreover, we need to stop thinking of a strategy as a goal. A goal is finite, like the goal posts on a football field, the hoop on a basketball court, or the home plate on a baseball field. Each time a touchdown, basket, or run is scored, it signifies the end of something. Goals signify an end. But there is no end in business.

As Simon Sinek writes in The Infinite Game: “Finite games are played with known players. They have fixed rules. And there is an agreed-upon objective that, when reached, ends the game. Infinite games, in contrast, are played by known and unknown players. There are no exact or agreed-upon rules. Though there may be conventions or laws that govern how the players conduct themselves, within those broad boundaries, the players can operate however they want. And if they choose to break with convention, they can. The manner in which each player chooses to play is entirely up to them. And they can change how they play the game at any time, for any reason. Infinite games have infinite time horizons. … Business is the ultimate infinite game. Companies aren’t created with an end date in mind. No one starts a company with the intention of closing it down in five or 10 years. Whether it is started by one person or a dozen, a company is a legacy, a kind of immortality.”

Strategies are developed for the long term. Most organizational strategies are designed to last five years. Although plans can be highly effective, they’re meant for the short or medium term, at best. Long-term plans are merely guesses, plain and simple. Too many things can change in the long term for plans to have any real meaning. And therein lies the fallacy of strategic planning: It is impossible to successfully implement something for the long term (a strategy) using a tool that is only viable in the short term (a plan).

Still, organizations need to develop strategies to remain viable. They must to plan for the future, make strategic investments and improve. Riaz Husein, CEO of Profit Chain, is fond of saying, “Hope is not a strategy.” He’s right. We cannot hope things will sort themselves out. We must develop a new mindset and mechanism for developing strategy, then create a methodology to realize it. And often this involves stepping outside our comfort zone. Here’s how:

1. Develop a strategy. This is the first step, and it may be harder than it looks. According to Roger L. Martin, professor and author, in his article in the Harvard Business Review, “The Big Lie of Strategic Planning,” there are three rules to follow in developing a strategy:

Keep the strategy simple.
Recognize that strategy is not about perfection.
Make the logic explicit.

If a strategy is a guiding principle, then a principle can be both an idea and an ideal. While an idea may be fully formed, an ideal is not. There is a bit of vagueness in an ideal, and that means taking some risk. All good strategies come with some risk. Be creative. By identifying and quantifying risks, they can be effectively added to the organization’s supply chain risk management plan. And they can be addressed through mitigation, avoidance, acceptance or transference, minimizing the time that we have to work without a net.

2. Create a road map. After developing a new strategy, we need to create a road map to provide direction. Why a direction and not a plan? Directions are flexible. Organizations develop strategies based on their view of what will happen. Because no one can accurately predict the future, strategies often change over time. It is rare for conditions to remain the same for years; therefore, strategies must have the ability to adjust. If an organization believes that the market for their product is expanding, they may choose to invest in a new factory or in the expansion of an existing one. Academic and author Henry Mintzberg called this intentional investment a deliberate strategy. And if, three years down the road, the market experiences a downturn, the organization may choose to revise its strategy. Depending on the severity and anticipated length of the downturn, they may want to slow the construction schedule, postpone the purchase of equipment or halt the project entirely. Mintzberg called this revision emergent strategy, which is the organization’s response to unanticipated events. An emergent strategy requires a new road map or, at a minimum, a revised one. The road map, and any emergent strategy that is developed from it, confirm or adjust the logic of the original strategy.

Road maps are developed at a high level, and they are often organized as a Gantt chart. The chart includes the high-level steps, major milestones, events and assigned durations for each step. Steps are sorted in chronological order. At this point, you may want to add budgetary costs to each road map, and assign responsibility to an individual or group.

3. Develop detailed plans for the 6-18-month timeframe. Develop detailed plans, including financial and labor budgets, for a 6-18-month period. Because this is a short period of time, there is a relatively low risk of uncertainty. Schedules and budgets are probably going to be accurate, and there is a high probability that work can be completed and the environment will not appreciably change. People can be held accountable for ensuring that schedules and budgets are executed promptly and within cost projections. At this stage, successful plans have distinct goals to meet.

4. Revise the road map and update detailed plans as required. About once a quarter the road map should be reviewed, adjusted and updated as required. Detailed plans should be updated weekly and new plans created as needed. This step enables you to provide detail and structure to the planning process, setting and achieving goals for the detailed plans and funding the process, making implementation possible.

Developing a strategy, then working to see it realized is not a linear process, but an iterative one. It’s not like shooting an arrow, but creating a piece of pottery. Strategy is like clay: From its original state, it can be formed into anything. It begins to take shape on the potter’s wheel, and the vision and skill of the potter determine its final form. The strategy begins to solidify by following the road map or series of road maps that provide it with direction and substance. Finally, the detailed workplan, financial plan and labor allowance give the strategy the material required to take solid form. At this point, your strategy is realized — but only temporarily. It must be further refined and shaped through continuous improvement. As the strategy improves, it gives everyone in the organization a sense of accomplishment and pride in its continuing success.

This article was prepared by the author, acting in his personal capacity. The views and opinions expressed in this here are the author's own and do not constitute, nor necessarily reflect, a statement of official policy or position of the author’s employer.

The ASCM body of knowledge and, specifically, APICS CPIM and CSCP designation programs provide in-depth education about supply chain design, strategy and planning methodologies. If you’re looking to master key planning skills and build upon your real-world experience, consider pursing an APICS certification.

A Healthy Dose of Technology: Investigating Telehealth

Tue, 12 Jan 2021 00:00:00 -0600

The COVID-19 pandemic has changed how people work, shop, and connect with others. It’s also changed how people see doctors and get other medical services. The recent rise of telehealth and telemedicine enables patients to handle minor issues at a safe distance and from the comfort of their homes. In addition, it reduces the flow of patients into doctors’ offices — a key benefit during times when social distancing and intense sanitation procedures are the norm.

Although the terms are often used interchangeably, telemedicine and telehealth are different. Telemedicine refers to remote clinical services; telehealth can include these and remote, nonclinical services, such as provider training, administrative meetings and continuing medical education (HealthIT 2019). For the purposes of this article, the terms will be used interchangeably.

Early signs

Interestingly, this isn’t a new concept. In 1984, Higgins, Dunn and Conrath noted that telemedicine was useful for delivering health care to remote areas. However, the authors pointed out that there were a few problems preventing widespread adoption, including

• resistance from doctors who felt threatened by alternative approaches to medicine
• the justification of high costs
• physician reimbursement
• legal implications (Higgins, Dunn and Conrath 1984).

Although these authors were generally optimistic about telehealth, the service only received modest growth throughout the next few decades. More recently, widespread use has been limited by low reimbursement rates and interstate licensing and practice issues (Mahar, Rosencrance and Rasmussen 2019).

A decade ago, the health care community celebrated virtual health as a gamechanger. However, providers, payers and patients were slower to adopt than anticipated (Fowkes et al. 2020).

As technology improved and pilot programs demonstrated the method’s usefulness, telemedicine gradually extended its footprint in a number of areas. From 2012 to 2013, the market grew by 60% (Mahar, Rosencrance and Rasmussen 2019). In 2016, an estimated 61% of U.S. health care institutions and 40-50% of U.S. hospitals used telemedicine.

However, the practice did not truly achieve widespread adoption until COVID-19 transformed the delivery of health care seemingly overnight. Consumer adoption increased from 11% in 2019 to 46% by mid-2020. It also helped that in 2020 the U.S. Centers for Disease Control and Prevention expanded the scope of telehealth classifications. Telehealth allowed providers to keep more appointments, rather than canceling them to space out patients for social distancing and sanitizing or because patients did not feel comfortable visiting in person (Bestsennyy et al. 2020).

Telehealth and telemedicine offer a variety of benefits, whether or not a pandemic is happening (Lowenhaupt 2020). Again, they can be ideal services for rural and aging patients. They can also be quick and highly effective ways to treat minor illnesses and ongoing medical conditions, as patients can save time and travel expenses by seeing a doctor from home. Although some medical needs require in-person care, many do not. Furthermore, home blood pressure monitors, pulse monitors and smartphone apps can track and transmit vitals to medical providers.

Trials and treatments

In spite of all of the benefits and arguments in favor of telehealth, there are factors hindering its growth. One of the more obvious ones is that patients have been reluctant to give up direct contact with their care providers. This is especially common among older populations. However, attitudes are changing, as telehealth has been proven to be an effective way to provide higher-risk populations with non-emergency medical care without potentially exposing them to the coronavirus. Telehealth also removes barriers to physical access to a doctor’s office by bringing care to the patient’s home, encouraging more frequent visits and earlier intervention.

“About 75% of the older adults I’ve seen over the past few months have been via telemedicine,” said Dr. Tom McCarrick, chief medical officer of Vanguard Medical Group, a family medicine practice with a large base of patients who are 60 and older, in an NJBIZ article. “It’s amazing how easily they have adapted to the technology,” (Peifer 2020).

Another obstacle has been that smaller medical practices have been slower to adapt to the new technology. However, this also is changing. As a result of the pandemic, physician practices are experiencing decreases in patients coming to the office. The situation would be even more dire if not for telehealth and the new willingness of the Centers for Medicare & Medicaid Services (CMS) to cover virtual visits. Since CMS changed its regulation of reimbursement, some medical practices report that telehealth is enthusiastically embraced across the country — to the point where it has become an integral part of care delivery (Terry 2020).

This leads to a third obstacle: Restrictive government regulations for Medicare and Medicaid previously declined to cover payments for this type of service. However, the scope of telehealth services reimbursed by these programs has increased. This includes CMS expanding Medicare reimbursement, Congress giving the U.S. Department of Health and Human Services authority to waive originating site requirements for Medicare beneficiaries, and states waiving licensing restrictions (Cohen 2020). Prior to March 6, 2020, when the policy expansion started, Medicare could only pay patients for telehealth for routine visits in certain circumstances, such as if the patient lived in a remote area and traveled to a local medical facility to get telehealth services from a doctor in another remote location. Even then, telehealth services generally could not be received at home.

Now, under the Coronavirus Preparedness and Response Supplemental Appropriations Act and Section 1135 waiver authority, doctors, nurse practitioners, clinical psychologists and licensed clinical social workers can offer a specific set of telehealth services, including evaluations and management visits or common office visits, mental health counseling, and preventive health screenings (Centers for Medicare & Medicaid Services 2020). Patients can receive care from a physician’s office, nursing home, rural health clinic or at home. According to the waiver, the goal is to enable social distancing and reduce the transmission of the new coronavirus, especially among high-risk populations (Centers for Medicare & Medicaid Services 2020).

COVID-19 truly has made telehealth indispensable and showed that doctors, patients, governments and insurance institutions that it can deliver quality medical care while reducing risks, costs, inconvenience and exposure to germs (Lipoff 2020).

The telehealth supply chain

Like many other industries and services, the growth of telehealth is dependent upon a supply chain. In this case, the supply chain delivers the service from the provider to the patient and includes the following links:

• Communication: The patient and care provider must be able to communicate. This requires reliable audio-visual technology.

• Diagnosis: Once the communication has been established, the provider needs to diagnose the problem. This may be accomplished quickly if the doctor is aware of the patient’s health history but otherwise may take longer as the provider tries to match the diagnosis with the best possible treatment. In this case, a diagnosis and treatment plan may require consultation with colleagues or additional research.

• Prescription: The doctor prescribes medication or therapy to treat the ailment. Prescriptions may be sent electronically to a pharmacy for in-store or curbside pickup or delivery via the pharmacy’s own service or a third-party delivery service. Some therapy treatments can be conducted through video conferencing or pre-recorded videos that the patient can follow.

• Follow-up: Virtual or in-person follow-up visits can be scheduled at the convenience of the doctor and the patient. Furthermore, remote monitoring devices that transmit blood pressure, blood sugar or other vital levels can make it easier for a doctor to offer ongoing care or do quick virtual check-ups (Sharma 2020).

• Billing and payment: Consumers already can offer remote payment for a variety of products in a plethora of ways. The major requirement for this supply chain is to coordinate payment from individuals with approvals from insurance providers or government agencies. However, changes have been made during the COVID-19 pandemic to make this process smoother.

This particular service happens in real time and also can lessen challenges such as traffic for other supply chains.

A positive prognosis

Telehealth has proven to be both reliable and cost effective, and there is widespread optimism that it will continue to be a dominant practice, even after the pandemic is under control. Krajecki (2020) suggests that emerging technologies will significantly improve the quality of virtual care beyond typical voice and video consultations. One example is the direct integration between telehealth services and consumer wearables that will enable clinicians to monitor and track such patient variables as heart rate, activity levels, sleep patterns and electrocardiogram results. In addition, augmented reality can enhance telehealth by providing a mechanism to better gauge a patient’s physical condition. Expected enhancements to digital devices include LIDAR cameras that will enable accurate measurement of physical changes, such as swollen glands, and detection of changes to physical appearance, such as paler skin. Finally, chatbots can handle simple tasks like pre-screening patients prior to a telemedicine appointment and more complex ones like providing potentially life-saving information.

Before the COVID-19 pandemic, the total annual revenue of U.S. telehealth players was an estimated $3 billion, with the largest vendors focused in the virtual urgent care segment, or helping consumers get on-demand instant telehealth visits with physicians. With the acceleration of consumer and provider adoption of telehealth and the extension of telehealth beyond virtual urgent care, up to $250 billion of current U.S. health care expenditures could come from telehealth applications (Bestsennyy et al. 2020).

Despite the enthusiasm for telehealth, it may be more beneficial in some situations than others. Both patients and doctors need to become accustomed to the practice and evaluate its benefits and drawbacks in relation to their specific needs.

For now, one thing is clear: Technology made telehealth possible, but the new coronavirus made it necessary.

References

1. Bestsennyy, Oleg, Greg Gilbert, Alex Harris and Jennifer Rost. 2020. “Telehealth: A quarter-trillion-dollar post-COVID-19 reality?” McKinsey & Co., May 29. https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality.

2. Centers for Medicare & Medicaid Services. 2020. “Telehealth Services.” CMS.gov.

3. Cohen, Jessica Kim. 2020. “HHS studies how to keep telehealth waivers, but can't do it alone.” Modern Healthcare 50 no. 23: 6.

4. Fowkes, Jennifer, Caitlin Fross, Greg Gilbert and Alex Harris. 2020. “Virtual health: A look at the next frontier of care delivery.” McKinsey & Co., June 11. https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/virtual-health-a-look-at-the-next-frontier-of-care-delivery.

5. HealthIT 2019. “What is telehealth? How is telehealth different from telemedicine?” HealthIT.gov, October 17. https://www.healthit.gov/faq/what-telehealth-how-telehealth-different-telemedicine.

6. Higgins, C., E. Dunn and D. Conrath. 1984. “Telemedicine: An historical perspective.” Telecommunications Policy 8, no. 4: 307.

7. Krajecki, Michael. 2020. “Technology for healthcare's new reality.” KPMG, May 11. https://home.kpmg/xx/en/blogs/home/posts/2020/05/technology-for-healthcare-new-reality.

8. Lipoff, Jules. 2020. “It's Telemedicine or No Medicine, Whether Doctors Like It or Not.” Barron's. https://www.barrons.com/articles/telemedicine-on-the-rise-in-era-of-social-distancing-coronavirus-51589906377.

9. Lowenhaupt, Charles. 2020. “Wealth, Aging and Technology in a Pandemic.” Wealth Management, May 11. https://www.wealthmanagement.com/high-net-worth/wealth-aging-and-technology-pandemic.

10. Mahar, Jamal H., MD; James Gregory Rosencrance, MD; and Peter A. Rasmussen, MD. 2019. “The Future of Telemedicine (and What’s in the Way).” Cleveland Clinic’s Consult QD, March 1. https://consultqd.clevelandclinic.org/the-future-of-telemedicine-and-whats-in-the-way/.

11. Peifer, Keith. 2020. “Time for telemedicine: How technology provides easier access to care for older adults during the pandemic, and beyond.” NJBIZ, June 15. https://njbiz.com/time-for-telemedicine-senior-health-care-access/.

12. Sharma, E. Kumar. 2020. “A Virtual Dose: Digital connect with doctors and remote health monitoring are changing the healthcare delivery model.” Business Today, May 31. https://www.businesstoday.in/magazine/cover-story/a-virtual-dose/story/403596.html.

13. Terry, Ken. 2020. “Medical practices reel financially from COVID-19 losses.” Medical Economics, 97, no. 7: 4-6.

For a list of 70 annotated references about this topic, contact the author at crandllre@appstate.edu.

Honoring La-Z-Boy’s Spirit for Corporate Social Responsibility

Tue, 12 Jan 2021 00:00:00 -0600

Editor’s Note: La-Z-Boy Inc. was the winner of the 2020 ASCM Award of Excellence — Making an Impact. This award recognizes an initiative that creates a better world through supply chain as a result of pioneering corporate social responsibility, proven business integrity and an unwavering focus on sustainability. Learn more at ascm.org/awardsofexcellence.

For almost a century, La-Z-Boy Inc. has been known for providing quality furniture that brings comfort to consumers’ homes. However, the Monroe, Mich.-based company is also passionate about making an impact through corporate social responsibility.

Neal Wayman, La-Z-Boy supply chain manager, explains that his company takes fair and beneficial business practices “one step further” by making it a competitive priority, where safety and sustainability are measured and emphasized alongside productivity and profits. “Those measures are tracked through a centralized system and emphasized every day in meetings at every facility,” he adds.

In addition, there are regular discussions throughout La-Z-Boy’s supply chain about which metrics best drive true change. These dialogs have propelled the company to achieve industry-leading records and performance in sustainability, safety and community service.

Building the best green team

La-Z-Boy leaders have found that, in order to achieve sustainability excellence, efforts must extend beyond the company’s four walls to its entire supply chain. To that end, La-Z-Boy requires all business operations and suppliers to comply with applicable national, state and local environmental laws and regulations related to air emissions, water discharges, toxic substances and hazardous waste disposal.

During the company’s annual La-Z-Boy Supplier Summit, company leaders recognize the best-performing suppliers for a variety of criteria, share important business updates and roll out new programs. The summit also enables La-Z-Boy employees and suppliers to examine and discuss the importance of environmental initiatives and collaborate to integrate sound and sustainable business practices. “Creating an atmosphere where employees and suppliers work well together is key to mutual success,” says Darrell Edwards, senior vice president and chief operations officer.

Through this and related efforts, La-Z-Boy has guided its suppliers to deliver products in the most efficient and effective manner possible. This includes reducing packaging and dunnage, using returnable containers, and opting for items that are made of easily recyclable materials. “These all have the benefit of being both good for the environment and good for business,” Edwards says.

Packaging reduction in particular must be handled carefully, notes Tim McCurry, senior director of environmental health and safety (EHS). It’s important to ensure that the furniture is properly protected during transit to avoid damage and even more waste,” he explains. “However, small changes in packaging can have large-scale benefits in both reducing the cost of the overall product and in reducing the amount of waste that has to be recycled. … The more we can focus on the efficiency of the business, the more we can do to reduce our environmental footprint.”

McCurry credits La-Z-Boy’s successful collaboration with its suppliers to two key factors: excellent communication and efforts to ensure that sustainability endeavors benefit everyone involved. “If you want to specifically improve your environmental footprint, you need to engage the right team,” he explains. “We bring in product and material experts from the suppliers and work with our internal process experts to identify ways to reduce waste or move to less hazardous materials.

Environmental efforts at home

La-Z-Boy employees in manufacturing, distribution and supply chain also partner with local businesses, community leaders and governments to achieve environmental sustainability. “Going above and beyond to be a responsible environmental steward is key,” says Cody Buell, EHS and sustainability manager.

La-Z-Boy is an Enhancing Furniture’s Environmental Culture (EFEC)–registered company. The EFEC environmental system, which was designed by the American Home Furnishings Alliance (AHFA), is composed of 11 elements that give furniture companies measurable goals for reducing their environmental footprints. By following the framework, La-Z-Boy has developed plans for energy, water and waste reduction at each facility. Its Cut and Sew Center in Saltillo, Mexico, was the first international facility in the industry to be EFEC registered.

The company has extended its environmental practices to follow the Sustainability Accounting Standards Board framework to track and disclose financially relevant environmental, social and governance topics. This has led to a partnership with energy management partners to develop a strategic plan for improved energy, water and waste conservation as well as better recycling efforts.

For now, the La-Z-Boy corporate office monitors electricity, natural gas, water and wastewater data for La-Z-Boy branded manufacturing operations, La-Z-Boy casegoods U.S. operations, La-Z-Boy distribution centers, La-Z-Boy corporate-owned retail stores and the world headquarters office. The company also monitors waste and recycling data for La-Z-Boy branded manufacturing operations, which generate the majority of the company’s waste and materials.

To date, La-Z-Boy’s environmental achievements include

12 million fewer pounds of waste sent to landfills in 2019, compared with 2007
reutilization or recycling of 97% of manufacturing waste
25 million gallons of water saved in 2019, compared with 2007 usage, through water conservation efforts
a $1.5 million reduction in utility expenses versus a decade ago despite increased production and rising utility costs
eight Zero Waste to Landfill–certified facilities.

As part of achieving that last milestone, La-Z-Boy opted for a recycling method that also helps others. “What we found was that many of the items we were disposing of had value to someone,” McCurry says. “The trick is to find that business or organization that needs it.” For example, La-Z-Boy donates scrap wood, leather and other materials to Help Heal Veterans, which incorporates the remnants into arts and crafts kits for recovering veterans.

Ultimately our goal is to be 100% efficient and therefore have no waste,” Buell says, “which even includes a goal of zero recycling.”

Redesigning operations for safety

In addition to protecting the planet, La-Z-Boy sets high standards and goals for protecting its workers. “A safe, healthy workforce is priceless to La-Z-Boy,” Edwards says.

Employee safety starts on day one with a training program that encourages safety all day, every day. From there, employees receive ongoing safety training and are encouraged to help support safety programs within the company. Each year, cross-functional teams work on special projects that support the company’s safety priorities.

One of the 2019 projects engaged a cross-functional La-Z-Boy team to improve the process for assembling the reclining mechanisms in the furniture. “This process utilizes formed rivets to join stamped metal parts,” explains Dennis Poland, regional EHS manager. “The traditional method of joining the parts exposed operators’ hands to crushing and ergonomic hazards.”

To reduce this risk, the team designed a dial table that allows operators to safely feed and retrieve parts without being exposed to moving equipment or ergonomic risks. The dial table also increases efficiency, so the improvement project paid for itself within eight months, Poland notes.

The company reached a plethora of safety milestones and achievements:

In 2019, La-Z-Boy’s Dayton, Tenn., manufacturing facility reached a U.S. furniture industry record of 18.8 million hours with no lost time incidents. The record represents a nearly 200% increase over the prior AHFA record.
The company’s South Florida distribution center has had zero lost-time incidents in more than 13 years.
Since 2012, La-Z-Boy has reduced its U.S. Occupational Safety and Health Administration recordable injury rate by more than 74%, achieving one of the best rates in the industry.
Through its ergonomics program, the company was able to reduce the average cost of workers’ compensation claims by 73% between fiscal years 2014 and 2019.
In 2019, 119 of the company’s retail stores went the entire year without any injuries.

All of these milestones were achieved in spite of increased throughput and greater employee productivity.

Sharing and caring

La-Z-Boy also encourages employees to show their local communities that they care. In 2018, the company launched its Summer of Caring program, which encourages employees to volunteer for the causes of their choice. So far, employees have logged more than 19,000 hours of caring both inside and outside of work hours.

At the request of employees, in 2019 La-Z-Boy launched a sister program, Season of Caring, to extend this volunteer program throughout the holiday season. In the inaugural year, employees donated 2,000 hours during Season of Caring, mostly through holiday-focused drives hosted by local nonprofits.

“Giving back to the communities in which we operate has always been woven through our company’s culture,” says Susan Vanisacker, director of community relations and the La-Z-Boy Foundation. “It was a fundamental belief of our founders, and I am proud that our organization carries this forward and consistently finds new ways to support those in need.”

Scouting New and Diverse Ideas

Tue, 12 Jan 2021 00:00:00 -0600

Editor’s Note: Jalayna Bolden, CPM, earned the 2020 ASCM Award of Excellence — Diversity and Inclusion Champion, which honors a professional who displays exceptional commitment to diversity and inclusion, fosters professional environments that value equality and individual differences, and inspires people of all profiles and backgrounds to succeed in supply chain careers. To learn more about the ASCM Awards of Excellence, visit ascm.org/awardsofexcellence.

What events led you to a career in supply chain?
After graduating from college with my accounting degree, I started working for the U.S. Department of Defense as a federal government contracting officer. Several years later, I joined AT&T as a senior contract manager in global supply chain (GSC). In my tenure at AT&T, I’ve worked my way through rotations in logistics, corporate real estate, then back to GSC as a sourcing director and now my current role in supplier diversity.

What are your primary responsibilities in your current role? And how to they enable you to make a difference?
I lead a team of GSC professionals who work to ensure that AT&T maintains a diverse supplier base of minority-, women-, LGBT-, services-disabled and veteran-owned businesses. Our program’s goal is to provide the maximum practicable opportunity for diverse businesses to ensure competitiveness within the industry.

How do you achieve the goal of “maximum practicable opportunity”?
Advocacy is key. Our team changed its focus a couple years ago to provide more advocacy for our diverse suppliers. We do this through tier-one and tier-two relationships, supplier education, and business fostering. If diverse suppliers cannot scale for a tier-one opportunity, we introduce them to a tier-two opportunity. The goal is to grow suppliers’ businesses so they’re able to one day fulfill a tier-one opportunity.

We also promote partnerships through supplier education for diverse companies. It’s important for a supplier to have an executive-level education about running a business because it helps them scale and grow and make better decisions for the company.

I also work through various minority supplier development councils in different cities, chambers of commerce, and other ethnic- and segment-based organizations to meet certified diverse companies that are qualified to do business with AT&T. Connecting with the diverse business community keeps me informed of new and innovative companies and helps me get to know business leaders. Together, we can advocate for policies and rules that favor and help small and diverse businesses thrive.

What is the greatest challenge you’ve encountered on your career path so far?

My greatest challenge was accepting a new role as a leader without knowing anything about how my team members do their jobs. I was able to overcome this by reading business books and connecting with a good mentor who reminded me that I was hired to lead and that my hiring manager was aware that I did not know my team’s subject matter. I was chosen because of my leadership skills. This righted my wrong thinking, and I was able to pivot back to being the leader I was hired to be.

What has been your most fulfilling accomplishment or experience so far?

I’m proud to lead a program that achieved more than $15 billion in spend with diverse suppliers in a single year. All of that was because of our change in focus on how we do supplier diversity so that it’s not just about spend. It’s so fulfilling to lead a program that’s about making a meaningful impact in the communities we live and work in and measuring that effort through the number of diverse jobs created. I had never had a job that aligns with my personal values, and this one hits the spot.

What is your top career goal moving forward?

I love this job so much that I would do it forever. However, I’m at the highest level in this job and do not have many career growth opportunities. My ultimate goal would be to work with advancing diversity and inclusion for people and suppliers at a higher level, such as as a vice president. I’ve been a change agent at a director level, so I can only imagine the positive changes and effects I could make at a higher level.

A Day with Jalayna Bolden, CPM

5:30 a.m. I wake up and start my quiet time of meditation and prayer. I then begin my virtual workout session wearing my new sneakers that were finally delivered. The manufacturer had temporarily stopped producing them because of a raw materials shortage early in the pandemic.

8:30 a.m. I have a day full of meetings with our supply chain team, suppliers and internal stakeholders. We have some big projects coming up, and I’m hoping to add several new suppliers — some diverse-owned — to work on them.

11:00 a.m. I meet with my direct reports to brainstorm ways to revamp our supplier scorecard for strategic suppliers so we are better prepared to make decisions about contract extensions, new request for proposal opportunities and feedback for suppliers.

2:00 p.m. I finally take a lunch break. I check on the contractors working outside on my patio extension. They too have been dealing with material shortages, which has lengthened the project timeline. But that’s okay because, once the patio is completed, I can sit back, relax and forget the long time it took to make the project happen.

3:00 p.m. I strategize with our sourcing and logistics teams about how to quickly send personal protective equipment to employees in our international locations. Fortunately, we have a robust number of suppliers who can make this happen.

5:30 p.m. As I’m logging off, I wish I could relax on my patio, but it’s not finished yet. I guess I’ll have to pivot to the living room and order some food. I hope the restaurant’s supply chain is intact and that it has my favorites in stock.

Safety Stock: A Contingency Plan to Keep Supply Chains Flying High

Tue, 12 Jan 2021 00:00:00 -0600

Unforeseen events are a fact of life. When it comes to inventory management, safety stock helps fill the gap when cycle stock is insufficient. The task for inventory managers is to calculate the appropriate amount of safety stock so that there’s enough to cover all situations without overwhelming the storage area or working capital budget.

According to the APICS Dictionary, safety stock is inventory that is carried to protect against forecast errors, as well as fluctuations in demand or supply. This type of stock, also known as buffer stock or reserve stock, is intended to reduce the frequency of stockouts and, in turn, enable companies to provide better customer service.

Some inventory managers use rules of thumb to govern safety stock amounts, such as the guideline that safety stock levels should equal 10-20% of cycle stock or two weeks’ worth of coverage. However, determining the appropriate safety stock level should be a bit more nuanced because it depends on supply and demand variability.

Accounting for demand variability

Calculating the appropriate safety stock level in the face of variable customer demand requires some basic statistics knowledge.

Figure 1 is a histogram, a plot showing the number of cycles at which each demand range occurs. In this case, the histogram plots demand for rolls of a specific grade of paper made on a paper-forming machine throughout 52 weeks. Actual demand was very close to the average —130 rolls per weekly production cycle — for 12 weeks of the year, when the actual demand was 125-135 rolls. Then, actual demand was 135-145 rolls for eight weeks and 145-155 rolls for five weeks. As actual demand extends higher above average, the number of weeks that actual demand was within that range decreases. There is a similar pattern on the other side of the average: Demand was 115-125 rolls for eight weeks and 105-115 rolls for five weeks. This bell-shaped curve is typical of many demand patterns.

Figure 1: An example histogram of weekly paper demand throughout 52 weeks

Some products will have little variability and thus a very narrow histogram. Others will have higher variability and a wider histogram. The width of the curve and the underlying variability can be characterized by a statistical property called standard deviation, which is symbolized by sigma. Although the calculation of standard deviation is beyond the scope of this discussion, understanding sigma can help with calculating how much safety stock is needed to provide various levels of protection against demand variability.

In this example, if the company does not have any safety stock, and only 130 rolls of cycle stock, there will be enough stock to satisfy demand during only half the cycles in the year. The company will face stockouts in the other half of the cycles.

Statistics teaches that if a company carries extra stock equal to 1 sigma, that will be enough to cover demand for 84% of the cycles. Sigma is 28 rolls in this example, so if the company carries 28 rolls of safety stock in addition to the 130 rolls of cycle stock, that should be sufficient to prevent stockouts during 44 of the 52 weeks. If safety stock equals 2 sigma, that should cover 98% of the cycles.

A company’s ideal safety stock level will be based on its tolerance for stockouts. For example, if company leaders decide that the company can tolerate stockouts during no more than 2% of the cycles, that sets the cycle service level (CSL) goal at 98%, which requires 2 sigma of safety stock, or 56 rolls in this example. A CSL is the percentage of cycles in which a company hopes to not have stockouts. The number of sigma required to achieve the CSL is called the service-level factor, or Z factor.

The general equation for the amount of safety stock required to cover demand variability is:

Z is the Z factor and is demand variability.

Figure 2 shows the relationship between Z and service level. The relationship is highly nonlinear: higher service-level values — or a lower potential for stockouts — require disproportionally higher safety stock levels. Statistically, a 100% service level is impossible. Typical service-level goals are in the 90%-98% range.

Good inventory management practice suggests that Z should be set independently for groups of products based on strategic importance, profit margin, dollar volume or some other criteria. This will result in more safety stock for those stock keeping units that are more valuable to the business and less safety stock for products believed to be less important to business success.

Figure 2: The relationship between service factor and service level

Watch the time units

The above equation assumes that the standard deviation of demand is calculated from a dataset in which the demand periods are equal to the lead time or production cycle length. If not, an adjustment must be made to the standard deviation value to statistically estimate what the standard deviation would be if calculated based on periods equal to the total lead time. As an example, if the standard deviation of demand is calculated from weekly demand data, and the lead time is two weeks, the standard deviation of demand calculated from a data set covering two-week periods would be the weekly standard deviation times the square root of the ratio of the time units, or

In the guide “Logistical Management,” authors Donald Bowersox and David Closs use the term performance cycle (PC) to denote the total lead time. For procuring raw materials, PC includes the time to decide what to order, communicate the order to the supplier, manufacture or process the materials, deliver them, and place them in inventory. Inside a manufacturing facility, the PC includes the time to decide what to produce, manufacture the material, release the material to the downstream inventory and return to the next cycle. In the event that a customer allows for a delivery lead time that is greater than the time needed to deliver the order, the remaining customer lead time can be subtracted from the PC.

The PC also can be considered the time at risk, such as the amount of time between the point when someone determines how much to order or produce and the point when the next determination is made and realized.

Using T1 to represent the time increments from which the standard deviation was calculated — which are one-week increments in our example — and PC to represent the total lead time or performance cycle length, this is the equation for safety stock:

Working from a forecast

If cycle stock has been calculated from historical demand, then the variance used in the safety stock calculation should be based on past demand variation. If forecasts are used to set cycle stock, then the factor requiring protection is forecast error. Standard deviation of forecast error would replace standard deviation of past demand in the safety stock formula, which would become this equation:

It is critical that the same time units — whether days, weeks or another unit of time — are used for all variables.

If there is bias in the forecast, the forecasting process must be improved to reduce and then eliminate the bias. Forecast bias will result in underestimating or overestimating the amount of needed cycle stock.

It also should be noted that the PC/T1 factor is a statistical adjustment to approximate the standard deviation of demand throughout the time period of the performance cycle and is just an approximation. It gives reasonable results in cases when the performance cycle is greater than the data collection time period. However, it can give very poor results going in the other direction — where PC is less than T1 — especially when the time parameters are small, such as when going from weeks to days. If PC is much less than T1, it’s useful to try to measure demand variability or forecast error on a more frequent basis to reduce T1 to a frequency closer to PC. Ideally, PC equals T1 so that no adjustment is needed.

Seasonal switches

If seasonality is a significant cause of demand variability, cycle stock should be periodically adjusted to reflect the forecast demand during the various high and low periods. If seasonality is not recognized and is instead treated as normal demand variability, a company could end up having a very high level of safety stock while being unable to provide enough material to cover demand in the peak season.

Lead time variability

If lead time variability, as opposed to demand variability or forecast error, is of concern, safety stock should be calculated with this equation:

The average demand term (D_average) is included in the equation to convert the standard deviation of the lead time, which is expressed in time units, into production in volume units, such as cases, gallons, pounds or rolls. This equation does not need an adjustment for PC.

Combining variability

If both demand variability and lead time variability are present, the safety stock required to protect against each factor can be combined statistically, which results in a lower total safety stock than the sum of the two individual calculations. If demand variability and lead time variability are independent — meaning that they are caused by different influences — and they both are reasonably normally distributed, the combined safety stock equation is as follows:

The reasoning behind this equation is that, if the two variabilities are independent, it is very unlikely that demand extremes will occur at the same time as very long lead times. Note that the demand elements are all squared, similar to the equation for the hypotenuse (C) of a right triangle with sides A and B:

If demand variability and lead time variability are not statistically independent of each other, safety stock is equal to the combination of the equations for demand variability and lead time variability:

Alternate approaches to safety stock
The calculations in this article sometimes result in safety stock recommendations that are more than businesses can afford to carry. For these situations, there are alternate approaches.

Sometimes an expediting process can be designed that can prevent a stockout when safety stock is insufficient to cover all random variation. For example, if the goal is a 98% cycle service level (CSL), safety stock can be reduced by about 38% — to a Z factor of 1.28 rather than 2.05 — if the company opts for a 90% CSL coupled with a contingency plan that prevents stockouts in the other 8% of cycles. However, the contingency plan must be planned and agreed upon in advance. It is unacceptable to ignore this step in the hopes that something can be figured out when the time comes.

This practice is especially appropriate when working with very expensive products, which are costly to carry in inventory. In one specific example involving an expensive but relatively lightweight product, total supply chain cost was reduced significantly by carrying small amounts of safety stock in overseas warehouses and then relying on air freight to cover demand peaks. The cost of air freighting a small percentage of the total demand was minimal compared with the cost of carrying large safety stocks of this highly valuable material on an ongoing basis.

Another alternative is to consider if a make-to-order (MTO) approach is possible. If lead times allow it, MTO completely eliminates the need for any safety stock — or cycle stock, for that matter. If lead time commitments will not allow for full MTO, finish-to-order (FTO) can enable a company to locate the safety stock where it is generally far less differentiated. Then demand variability will be much less, on a relative basis, and safety stock requirements will be lower than they would be with finished product inventory. Customers will sometimes be willing to accept longer lead times for highly sporadic purchases, making FTO or MTO more of a possibility.

Satisfying corporate goals
Although meeting a certain CSL is useful, business leaders often are more concerned about the percentage of total volume ordered that is available to satisfy customer demand. This is known as fill rate and often is considered to be a better measure of inventory performance. While CSL is an indication of the frequency of stockouts without regard to the total magnitude, fill rate is a measure of inventory performance on a volumetric basis.

The specific calculations of safety stock required to achieve a desired fill rate are complex and beyond the scope of this article. However, the basics of this concept still are important. With stable demand patterns and supply behavior — that is, low standard deviations of demand and lead time — fill rate will generally be higher than CSL. Although stockouts will occur, the magnitude of each stockout will be small because of the low supply and demand variability. The opposite also is true. If there is high variability in demand or lead time, the magnitude of any stockout can be quite high despite carrying safety stock. In this case, the fill rate actually is less than CSL.

Frequent stockouts leave customers in difficult situations, resulting in supply chain bottlenecks if components are unfulfilled or upset customers if there is not enough stock to meet demand. In short, it’s important to be smart about safety stock in order to keep supply chains moving.

Editor’s Note: This article is a continuation of “Better Planning and Scheduling with the Right Cycle Stock Levels” from the October-December 2020 issue. The previous article described the role of cycle stock and how to determine appropriate levels. Now, this article focuses on the important role of safety stock.

The Power of Positivity

Tue, 12 Jan 2021 00:00:00 -0600

Over the past few decades, I’ve held a variety of roles in operations, and I’ve worked for and with many different types of leaders. Many were quite effective. Others? Not so much.

Some leaders react rather poorly when things don’t go as planned. They say something to the effect of, “I guess I’m going to have to go downstairs and get to the bottom of things,” followed by, “Heads are going to roll!”

When a problem occurs, leaders absolutely need to investigate, determine the root cause and take steps to ensure it does not happen again. But a “heads are going to roll” approach is never a good one.

And what about when things go right? Do these leaders demonstrate the same fervor? Do they run downstairs to ask who or what contributed to the success and offer their praise?

I first started thinking about these questions when I came across an article about the U.S. Airways plane that crashed into the Hudson River in 2009. I held onto it because the headline caught my eye: “Plane in Hudson tells story of what went right, NTSB says.”

When a plane crashes, it’s only natural that people point out the problems. Thankfully, in this incident, no lives were lost. And I found it interesting that the NTSB was focused on finding out what contributed to that positive outcome, first and foremost.

Which brings us back to operations at our facilities: Do we put the same amount of resources and energy into investigating what goes well as we do into what goes wrong? If we’re unintentionally only focusing on what went wrong, we will create an atmosphere of fear and intimidation. This stifles energy and enthusiasm.

Alternatively, what if we lead by example and strengthen the teams we work with? Think of the benefits. We will create an environment in which people are empowered to improve. Employee retention will increase, motivated staff will be looking for ways to advance processes, and quality will be achieved.

For instance, I once noticed that a shift had been substantially more efficient than usual. Of course, I wanted to know why. So, the following day, I ordered pizza and had it delivered to the lunchroom. While we ate together, I eventually steered the conversation toward the previous days’ shift. I commended them, then asked what they thought contributed to the efficiency. They said they had adjusted how a particular product ran on the line. They had investigated the material being run and were able to tighten up specifications and offer savings. I think you’ll agree this is valuable information — especially for the price of a pizza!

We live in a society where we tend to react to the negative. When things go wrong, we do something. When things go well, too often we do not. Do you only follow up with vendors when they’re late or they deliver an incorrect product or if paperwork is missing? Do you only reach out to your IT colleagues when your system crashes? Does your inventory team only hear from you when the count is off?

What would the effect be if we all said thank you just a little — or a lot — more often? There’s no doubt that this would lead to even higher levels of service and performance. That’s the power of positivity.

On-Call Supply Chain Professionals Help Startup Achieve Agility and Profitability

Tue, 12 Jan 2021 00:00:00 -0600

Challenge: Reducing the cost, time and risk of bringing electric vehicles to market

Solution: IndustryStar Supply Chain as a Service

Company: May Mobility Inc.

Headquarters: Ann Arbor, Mich.

Operation: Electric autonomous shuttle original equipment manufacturer

The challenge

May Mobility Inc. develops, builds and operates electric autonomous shuttles for cleaner urban mobility. The company operates three U.S. service centers with 6-10 shuttles per site. Because these shuttles run 10-12 hours per day, service parts management, as well as maintenance, repair and operating (MRO) tasks are critical.

Initially, these practices resulted in excessive waste. The shuttles are composed of modular assemblies. As parts were removed from modules to replace worn parts, entire modules were scrapped at full bill-of-material value. Each service center would store removed parts to be shipped back to company headquarters months later, usually without information documenting service issues or reasons for replacement.

At headquarters, the returned parts were unboxed and placed in a quarantine area. Once a returned part was in quarantine, the general assumption was that it was unusable, so it was slated for recycling. This resulted in reworkable or immediately reusable parts being discarded.

To further complicate matters, the company struggled with cost and timing challenges related to procuring supplies for production, service management and MRO because the company’s volumes were so low.

The solution

May Mobility chose IndustryStar’s Supply Chain as a Service offering to manage its end-to-end supply chain operations. The technology-enabled, managed-services platform combines on-demand, experienced professionals with cloud-based supply chain productivity software to support a company’s supply chain activities. For example, the IndustryStar solution ensures parts and materials availability, checks for optimal pricing, and leverages purchasing power to reduce costs while still delivering consistent and timely supply. For May Mobility, it also manages service parts and MRO physical deliveries, inventory, and reverse logistics.

May Mobility leaders use the platform’s automated plan-for-every-part (PFEP) software to collaborate with IndustryStar team members and suppliers in real time in order to exchange part costs, lead times and technical requirements. This, in turn, accelerates shuttle timelines. May Mobility’s engineering and production teams also use the PFEP cloud software to collaborate to develop and optimize future generations of shuttles.

In addition, May Mobility teams at each site are in the process of deploying IndustryStar’s mobile software application to automate the placement of repeat service parts and MRO purchases with one-button ordering.

The results

Through working with IndustryStar, May Mobility has achieved $673,000 in part cost avoidances, expedited its launch timeline by three months and avoided the need to hire a supply chain team. All of this was achieved within 120 days, despite a 500% increase in shuttle production volume.

“IndustryStar is saving us 18% on every electric autonomous shuttle we build and has reduced our full-time equivalent people costs by $170,000 per year,” says Edwin Olson, May Mobility CEO and cofounder. “Working with IndustryStar also has reduced our time-to-market and made us more efficient.”

Lukas Schrader, May Mobility director of autonomous vehicle production, adds, “Utilizing IndustryStar as our on-demand supply chain partner allows us to accelerate innovation while enhancing company agility and profitability.”

Moreover, the solution also has laid the groundwork for lower-risk expansion. May Mobility is improving its agility and profitability while leveraging the support of supply chain professionals without the startup expenses of in-house, full-time supply chain staff and supply chain software. Going forward, IndustryStar can adjust its support as needed to help May Mobility reach its supply chain operations goals.

What Will It Take to Vaccinate the World?

Fri, 08 Jan 2021 00:00:00 -0600

Right now, humankind is witnessing the greatest vaccination effort in history. More than 15.9 million doses in 37 countries have been delivered thus far. Getting that number into the billions will be one of the most momentous logistical undertakings ever achieved.

In many countries, the vaccination effort is being criticized for being too sluggish to effectively prevent the continuing spread of COVID-19. “Experts are calling for a sharply stepped-up national approach,” an ABC news report states.

Here in the United States, for example, the Food and Drug Administration supplied fact sheets as “assembly instructions” for preparing the concentrated vaccine doses, and the Centers for Disease Control and Prevention provided educational materials to hospitals. However, states and facilities are left to decipher how to actually get the vaccinations to their patients.

“There are changes that could speed up the pace and meet the goal of vaccinating the vast majority of the population needed to stop the spread of the virus through herd immunity,” Dr. Peter Hotez, Codirector of the Center for Vaccine Development at Texas Children’s Hospital, told ABC. “Vaccinating millions of people in a matter of months requires more infrastructure than sending people to their local hospital or pharmacies.”

He notes that the federal government can help states and cities open mass vaccination sites; set clear goals on how many people need to be vaccinated each day; and put less emphasis on phased eligibility, if doing so interferes with that timeline.

Meanwhile in Europe, the Dutch government has come under heavy criticism over a COVID-19 vaccination plan that made the Netherlands the “vaccination straggler.” Britain has released a second vaccine, while staring down a third national lockdown that will last at least six weeks, according to the Associated Press: “Authorities struggle to stem a surge in COVID-19 infections and relieve hospitals, where some patients are left waiting in ambulances in a parking lot for access to overcrowded wards.”

In Latin America, the AP says many experts believe the worst has yet to come. Mexico City today has more COVID-19 patients than ever before. In Brazil, the number of intensive-care patients reached its highest level since August — and the nation still hasn’t approved a vaccine.

In Africa, Zimbabwe has reinstated curfews, prohibited public gatherings and indefinitely postponed school openings. South Africa, the continent’s hardest-hit nation, is wrestling with another severe variant of the virus.

Many Asian countries that had been improving are now seeing that progress begin to slide. Infections in Thailand are surging as a result of “complacency and poor planning.” Japan has declared a state of emergency and has reinforced border controls after a swell of cases around New Year’s Eve. And China is closing schools early for Lunar New Year and has instructed migrant workers not to go home for the holiday.

Saving lives together

The only effective way to counteract a global pandemic is with a global response. Lessons learned from the supply chain disruptions of 2020 must now be absorbed and applied to the vaccine distribution effort. Unfortunately, we’re not there yet. We even seem to be making some of the same mistakes that impeded the initial response.

Vaccinating the world requires a truly coordinated effort. And to achieve this goal, there’s undoubtedly a lot to consider. I look forward talking more about this on Tuesday, January 12, at 3:30 p.m. CST. ASCM Editor-in-Chief Elizabeth Rennie and I will be on LinkedIn Live to continue the discussion. Follow the ASCM LinkedIn page, and join us.

Case Study: Brewing Up Enduring Results

Tue, 05 Jan 2021 00:00:00 -0600

THE CHALLENGE

When Italian brewery Birra Peroni experienced domestic and international market growth as more consumers sought out premium beers, its leaders knew they had to upgrade the brewery’s glass bottling operations to keep up with demand. As long as changes were being made, the company decided to explore more eco-friendly options as well. “Faced with the need to expand our capacity, we used it as an opportunity for rationalizing the handling of returnable glass bottles (RGBs),” says Plant Manager Michele Cason. “Therefore, we chose to enlarge the RGB production in our Bari, Italy, plant.”

With the plant producing various packaging formats — including RGBs and one-way bottles — the new bottling equipment would need to offer versatility and increased productivity while supporting sustainability and reduced resource consumption.

THE SOLUTION

With a new complete glass bottling line from Sidel, these goals became achievable. The EvoFill Glass filler has a hygienic, no-base design and includes level probe electronic filling valves that ensure a high accuracy and a wide range of filling set points without any adjustment or replacement of parts. This was particularly important for Birra Peroni, as the brewer handles five different formats in Bari: 33-centiliter, 50-centiliter and 66-centiliter sizes in both RGBs and one-way bottles; a 75-centiliter one-way bottle; and a 20-centiliter RGB.

In addition, the new EvoDeco Cold Glue labeller ensures fast changeovers through its quick-release, toolless label pallets combined with an automatic label magazine loading system. “Equipped with three stations, EvoDeco Cold Glue ensures a high-precision application of the precut paper labels on our embossed glass bottles,” says Luigi De Liddo, packaging engineering manager at Birra Peroni. To control the label positioning according to the bottle’s embossing, a custom feature was integrated within the labeler. It all came together with a vision system that can correctly orient each bottle at the infeed for a perfect label application.

THE RESULTS

The turnkey glass line in Bari now is running at 50,000 bottles per hour and has been designed according to an arena layout so that it can be managed by only four operators. This new system also takes into account the various needs of expanded RGB operations. “We also are processing returnable glass bottles here on-site, so we had to design a smart crate circuit regulation,” De Liddo explains. “Sidel stepped in and helped us manage crate accumulations during empty crate palletization. This approach has led to a seamlessly running line and maximum uptime.”

In addition, the integration of the Swing pasteurizer ensures sustainability benefits, cutting energy consumption by 25% and saving water. To date, 77.6 billion containers have been pasteurized worldwide on Swing equipment, which has saved the equivalent of 2,135 Olympic swimming pools of water and as much as 60,000 kilocalories of energy, compared with other pasteurizers.

“By choosing Sidel as our partner, we realized productivity gains and massive flexibility improvements,” says Antonio Martalò, packaging manager at Birra Peroni. “We can now scale our production setup according to market needs.”

CHALLENGE: Upgrading glass bottling capacity while expanding packaging flexibility

SOLUTION: Complete glass line with Sidel’s EvoFill Glass filler and EvoDeco Cold Glue labeler

COMPANY: Asahi Group Holdings Ltd.’s Birra Peroni

HEADQUARTERS: Rome

OPERATION: Beer brewing

To comment on this article, send a message to feedback@ascm.org.

Ringing in the Optimism

Thu, 31 Dec 2020 00:00:00 -0600

Happy New Year! It feels great to be able to greet you in 2021. In the past year, we experienced a pandemic that took far too many lives and created the biggest disruption to manufacturing operations in modern history. We also lived through a recession, a skyrocketing number of cyberattacks, a heated U.S. presidential election, and multiple reasons to have our voices heard through protest. In short, 2020 was a year we won’t soon forget and one that will forever change the way we live and do business.

As the world rebuilds, supply chain will continue to play a vital role — whether making and distributing COVID-19 tests, manufacturing vaccine doses and related supplies, managing cold-chain logistics, or handling the last-mile delivery to share the lifesaving medicine with people across the globe.

This past year also gave many people a deeper appreciation for the Earth. During stay-at-home advisories, hiking, neighborhood walks and gardening gave us a break from staring at our walls. And, as I wrote on Earth Day, the shift in behaviors caused pollution levels to plummet, waterways to run clear, and animals to reclaim parks.

Many of us saw this as an important opportunity to reconsider business practices and double down on sustainability efforts: Apple CEO Tim Cook pledged to make the technology company’s products and supply chain carbon neutral by 2030. Many automakers are working to produce affordable electric vehicles to help reduce drivers’ environmental impacts. And Tesla CEO Elon Musk aims to make a $25,000 electric car within the next three years. Furthermore, Gartner says 70% of supply chain leaders plan to invest in the circular economy by 2022.

We can come back from anything

In spite of environmental wins, 2020 was tough for many businesses. Some closed their doors permanently, and many workers faced reduced hours or lost their jobs. In the coming years, I hope those displaced by the pandemic, and others, will tap into ASCM’s reskilling tools and find satisfying new careers in supply chain.

This brings me to something gratifying from the past year: the results of ASCM’s 2020 Supply Chain Salary and Career Report. We learned that 88% of you feel positively about your careers and 85% would recommend supply chain as a career path to others. In spite of the incredible pressure placed on supply chains in 2020, we love what we do — perhaps even more, now that we’ve witnessed the countless ways supply chains make an impact.

With your determination and enthusiasm, the global supply chain community will push past the challenges of 2020 and continue creating a better world. The past year may have been dark, but I know the future is bright.

Supply Chain Industry and Academia Partner to Captivate Young Minds

Mon, 28 Dec 2020 00:00:00 -0600

It’s a troubling and frequently reported issue: The supply chain industry is facing a severe talent shortage in the coming years. In fact, a 2018 Gartner report found that 63% of the industry professionals surveyed cited “talent shortage” as their most pressing concern. A University of Maryland/DHL study supports this result, noting that global demand for supply chain professionals outpaces talent by 6 to 1. In particular, scarcity of employees with digital acumen is hindering growth and change within the modern landscape.

The causes are also well documented. Baby boomers, the employment backbone of the industry, are getting older and retiring, and younger generations aren’t entering the field at the same pace. One reason for this is that the industry is not well understood and lacks broad, mainstream recognition and appeal. Interestingly, supply chain has been making strides here of late, as a result of being in the limelight during much of the COVID-19 pandemic. Yet, that event also upended the world economy and decimated industry expectations. Supply chain professionals were forced to reevaluate each process they had in place — everything from how they make hiring decisions to what skills their employees should have.

How can the industry prevent this drought of talent? Rob van der Meulen, a contributor to Gartner, names three pillars for building a workforce for the next generation, which are

1. agile, collaborative leadership

2. continuous workforce transformation

3. innovative talent sourcing and development plans.

That’s where the academic solution comes in. While recruiting professionals out of other industries is an admirable goal, a far easier and more fruitful tactic is to recruit potential employees while they are still in school. Job fairs for graduating seniors are great, but don’t overlook the power of reaching students when they first enroll in college; better yet, recruit them before they even apply.

University leaders have learned that collaborating with businesses and industry professionals is a meaningful and productive method of catching students before they’ve already chosen their career paths. College professors and industry professionals are working together to create the type of curriculum that produces graduates in the field of supply chain who possess the right technical and soft skills to excel in the industry — and close that talent gap.

THE RECRUIT

Many professors in the field of supply chain are confident that they can keep students engaged in the curriculum once they begin; it’s such a far-reaching industry that affects many aspects of modern life. The problem, they agree, is getting students enrolled. Ideally, the industry starts introducing students to opportunities in the field from a young age. Celeste Ayers is a senior adjunct professor at Golden Gate University in San Francisco, California, as well as a division sourcing and procurement manager for Parker Hannifin Corporation, Racor Division. She maintains that building awareness of career opportunities among high school, middle school or even elementary school students is key. “I think of my own children,” she says. “They have field trips to the police station or firehouse because those careers are accessible and visible in society. What about touring a manufacturing plant? Integrating supply chain STEM activities in the classroom? Introducing children to the concept of free trade and global supply chain concepts?”

Joe Walden, lecturer at the University of Kansas (KU) School of Business in Lawrence, Kansas, and assistant area director of analytics, information and operations management, outlines a direct program. KU hosts high school juniors and their parents for a college visit. There, they introduce the basics of supply chain and set up a mock classroom to demonstrate what students would be learning in the department. Then, the faculty discusses the promise of a career in the industry, including the placement rate for students upon college graduation; the different opportunities in the field; and the financial perks, such as signing bonuses and starting salaries for various entry-level positions. While these kinds of conversations interest students, they excite their parents even more. Having this type of insight into the potential career paths of their children is both comforting and compelling.

Says Ayers, “It is so important to start supply chain career awareness before students exit high school. There is a great big world of opportunity as the future of competitive advantage moves from individual contributor organizations to supply chain versus supply chain competitive advantage.”

SUPPLY CHAIN 101

Gary Beaudette, supply chain consultant and adjunct instructor at Brandman University in Irvine, California, and CEO of Beaudette Consulting, describes another method for getting students interested in the field: market it in a way that appeals to today’s trends. Some community colleges, for example, have enacted a consortium of entrepreneurship and innovation programs to teach students how to build their own businesses.

Beaudette points out that, in some respects, entrepreneurs are quintessential supply chain professionals. No matter what type of businesses they run, they must concern themselves with basics of the supply chain — from where they source their materials to the logistics of moving products from a distribution center to a warehouse. And the word “entrepreneur” is much more salient than “supply chain manager” to most people. A 2018 survey of 1,000 U.S. teens by Junior Achievement and Ernst & Young found that almost half (41%) were interested in becoming entrepreneurs. Owning a business is romanticized in American culture, whereas most young people don’t have even a basic understanding of the role of the supply chain in their lives.

One method Beaudette uses for integrating the concepts of supply chain into his entrepreneur workshops is simulations, such as the beer game — the decades-old, role-playing game commonly employed to teach the functionality of the supply chain by assigning students the task of producing and distributing beer. “I teach them supply chain without them knowing any of the verbiage yet,” Beaudette adds. From there, he explains how to make a supply chain work.

Walden uses a similar tactic to introduce supply chain to his students and encourage them to think about how the industry affects them personally. As one of the first homework assignments, he instructs students to pick out three things from their closets and track the supply chain from beginning to end. “Now they can start thinking, ‘Well this shirt came from Cambodia, the cotton had to come from somewhere, someone had to manufacture it and get it from Cambodia to the United States. It probably came by ship to the West Coast, had to get from the West Coast to a distribution center, the distribution center to a store or from a fulfillment center to my front door.’” Most young adults have probably never thought about where their clothing comes from; or at most, they’ve thought about the factory where it was made. Tracking a college sweatshirt from cotton field to front door delivery is an eye-opening experience that can solidify the concept of the supply chain and engage students in considering the many ways in which they could work in the industry.

HANDS-ON TRAINING

Although classroom time, from traditional lectures to small-group simulations, is vital for teaching students the principles of supply chain management, seeing supply chains in action is another important method for learning how they function. “Anything we can do to expose students to more concepts, the better,” Walden says. He works with local organizations, such as medical centers, to allow students to visit the business to see what they do. Witnessing a medical center’s supply chain in person is a useful tool to ground the concepts taught in the classroom. And after visiting several businesses, students can compare them with other distribution centers in the area to see how they differ, he notes.

In fact, Walden takes it even further with an annual study abroad program in Panama to watch and understand the businesses and supply chain operations connected to the canal. Students see and compare the shipping containers and distribution methods used at various ports. “We can explain all the details in the classroom, but it’s much more relevant and easier to understand when seeing it in person.” He recalls standing at a port in Panama and students saying, “Wow, now I’ve got it.” After talking about theoretical concepts for several weeks in class, they’re seeing it “up close and personal.”

MASTERING SOFT SKILLS

Both professors and practitioners agree that key soft skills are essential for any new member of the supply chain industry. Unfortunately, they are sometimes lacking in today's graduates. Without these necessary soft skills, new recruits in supply chain are less likely to succeed and stay in the industry for the long term. Beaudette names communication, teamwork and collaboration as the crucial proficiencies that students should be learning through hands-on experiences in the classroom.

Karen Smith, vice president of Global Supply Chain Operations at Kontoor, said in a Logility webinar that the “Achilles’ heel” of the new generation of talent is analytical thinking. The metrics and the algorithms are all there, but “it comes down to decision-making and storytelling and influencing stakeholders in the project.”

Ayers had the same experience: “One of the key skills that I have found that employees struggle with is the application of theoretical concepts. I try and stray from traditional research paper writing in my courses and focus on projects where the learner is challenged to put the concepts of the course into action.”

Walden suggests instructors modify curriculum to include metrics and calculations in the supply chain. So, as new employees, these graduates will be able to say to their bosses: Here’s what these numbers mean to our company. “Get students thinking, I have this formula for this forecasting technique — but what does it really mean?”

Finally, Ayers notes, “Through my managerial experience with professionals at different levels in their careers, I have found that the skills of self-reflection and goal setting are a challenge, so I incorporate these types of activities in my classroom whenever possible.”

THE INDUSTRY-ACADEMIA THROUGH LINE

Many students enrolled in undergraduate education fear that their degrees won’t translate into future employment. Only 53% of college students feel very confident that their major field of study will lead to a good job, according to a 2017 Gallup-Strada poll. Even if they’re reassured by their counselors and professors about the viability of their education, it can be difficult to understand how the concepts learned in school apply to the real world. Ayers points out that universities have an obligation to “partner with industry to figure out what skills they are projecting to need in their business in the next two, five and 10 years” so that academic departments can adapt curriculum and course offerings.

Walden notes that the career center at his university regularly reaches out to businesses that recruit at the school and invites them to speak in the classroom. They also maintain a supply chain management board of advisers, for which they ask business leaders to counsel the board on what skillsets they need from students who are entering the industry; what competencies new graduates consistently lack; and what kinds of adjustments to the current curriculum they would recommend, including topics they’d like students to learn more about and what concepts are no longer relevant to the industry.

But companies should be doing their part, too. They have the opportunity to shape future employees before they even enter the workforce. The report “Unemployment Among Young Adults” by the Brookings Institution describes the ways in which different industries and employers — including educational institutions, governments, and philanthropic organizations — should be considering holistic solutions to the problem of hiring and retaining the talent of young adults in the workplace. “Employers should better define and predict their skill requirements and workforce needs for critical middle-skill occupations and invest in more effective strategies to recruit, assess and train for those skills.”

Gartner contributor Gloria Omale argues that building a diverse internship program is key for companies looking to expand their talent base. Not only can those interns bring immediate value to the organization, but their talent can be developed for the future — ideally at that same organization. And Ayers suggests that the same should be done through colleges and universities, not just with new graduates. “The industry should work to invest in schools at all levels to provide guidance and career pathways through internships or targeted hiring programs to incentivize participation in these occupations,” she said.

Karin Bursa, executive vice president of Logility, points out that industry leaders, too, are excited about incoming talent. “Generation X, Y and Z talent pools bring a new set of skills; they’re digital natives who embrace technology and automatically look for more efficiency,” she says. “And they’re helping employers be ever more productive.”

PREPARING FOR THE FUTURE

One thing that may be scaring off college students, new graduates and professionals in other fields is the well-advertised threat of automation to jobs in the supply chain industry and beyond. However, most experts agree that automation is not a death knell to the industry; in fact, running complicated software is an entirely new job that factories, warehouses and distribution centers will require in the next few years. “Machines are made and controlled by people,” said Ayers. “So, even though the machine may be taking over a task, it still needs a person to build, program and maintain it. Those are the skills that need attention; that should be the opportunity to grow and continually learn.”

Walden agrees: “True competition is between supply chains. … Sometimes we get too concerned about automation and systems and forget about the people. We’re in the people business. People and automation go hand in hand.”

Taking this a step further, Bursa specifically notes that automation might be the perfect solution for preserving the “tribal knowledge” of the industry that is currently maintained by retiring baby boomers.

Although the qualifications employees need to stay relevant will continue to evolve, as new technologies are invented and adopted, processes change, and the world grows smaller, there will always be a need for young professionals to enter the field of supply chain. It’s more crucial than ever to show students how their work in the industry can affect their communities and the world at large. And it’s up to industry experts, universities and professors to show potential supply chain talent the wealth of opportunities supply chain presents.

Happy Holidays from ASCM

Thu, 24 Dec 2020 00:00:00 -0600

2020 has been, well, a grinch. After such a rough year, it would have been nice to enjoy the comforts of December celebrations with family and friends. Unfortunately, for many of us, that’s simply not an option.

Today, the people around the world who celebrate Christmas are waking up to a very different holiday. There may not be quite as many gifts under the tree, as consumers cut back on spending amid an economic recession and high unemployment. More noticeably, there will be significantly fewer get-togethers. We all know it’s important to choose safety, but that doesn’t mean it’s a pleasant choice. Many of you may be spending time somewhere new this year, as approximately two-thirds of Americans say they plan to avoid travel. In other countries, staying home is a requirement.

Yet, even amid the challenges of this holiday season, I’m feeling fortunate today because I’m part of the supply chain family. And my family members have inspired me this year like none before. First and foremost, you stepped up during a global pandemic while championing our front-line heroes. In addition, you supported the brand new ASCM Foundation, which is making an impact by building frontier and humanitarian supply chains, increasing K-12 supply chain and STEM career awareness, supporting workforce development, and much more.

Speaking of workforce development, hundreds of you earned an APICS designation or congratulated newly certified colleagues during the Summer Certification Challenge. Others contributed their expertise and insights to SCM Now magazine, our blog and our communities. Supply chain students demonstrated their own resilience this year as they pivoted to a virtual format for the Case Competition, delivering impressive results. Experienced supply chain leaders donated their time to countless young professionals through ASCM’s virtual mentorship program.

And even though COVID-19 prevented us from traveling to the ASCM annual conference, we discovered new trends and networked with people from around the globe at ASCM Connect Virtual. Because the event was so successful, we’ll be hosting a hybrid annual conference next year, offering even more ways to bring this supply chain family together.

2020 has been taxing, but through the experience, supply chain has emerged into something truly brilliant. We’re part of a global community, and because we stay connected, we keep each other strong.

On behalf of everyone at ASCM, thank you for being a part of this supply chain family. No matter which holiday you celebrate, we wish you and your loved ones a happy, safe and healthy season.

Prepare for a Winning Supplier Negotiation

Tue, 22 Dec 2020 00:00:00 -0600

Negotiating is how we get what we want from others. Everyone has negotiated at one time or another: As children, many of us wanted to stay up late and would bargain with our parents. As young adults, maybe we tried to get a good deal on a car and haggled with the salesperson. And as supply chain professionals, we are often in “buyer mode,” where it is imperative that our negotiating skills are disciplined and constantly honed.

Although there are several important steps to the negotiation process, this article will focus on preparation, as so much hinges on the groundwork. Furthermore, once you earn the reputation of being someone who is always well prepared, this sets the tone for everyone else to bring their A-game.

I have spent 35 years in the foodservice industry, so here’s an example that features cornmeal breader. But feel free to imagine any product or service that you may need to purchase.

First, to be certain the supplier understands your expectations, you must know the product specifications. For cornmeal breader, there is a detailed formula of ingredients, which illustrates exactly how it is made and how these items contribute to the cost. The ingredients are corn and flour, derived from the corn bushel and hard red wheat markets, respectively. Then, there is processing that takes raw material from farm to ingredient. This is all critical information. And don’t forget about non-food components, such as plastic and cardboard, as well as how these resources are obtained and how they affect the cost. Develop a library of online resources to serve as your reference. Your product is the foundation of your RFP, and you must possess this kind of detailed knowledge.

Next, know the players and do your homework on them. The goal is to include only the suppliers who meet your standards and match your culture. Having subpar suppliers is a waste of your time, so vet them appropriately. Here are some key considerations:

Does the supplier mirror your core values? If you’re unsure, review their website, ask if you can talk to their customers, and reach out to people in your own network who might have knowledge about them.
Is their location a good fit? For example, if you’re based on the West Coast, it might not be cost-effective to work with a supplier based in New York.
What are their financials? Find out if the supplier is publicly or privately held, who are their key stakeholders, and what percentage they own.
What is their track record? Ensure that they have the proper certifications and perform well during inspections.

Consider implementing an annual RFP schedule and targeting certain suppliers that you want to learn about. Let’s continue with the cornmeal breader example: You would set up a visit to the farm, the milling company and the processor. Be sure that you control the agenda — and this should be done well in advance of your visit to ensure it is impactful and your expectations are met.

The people who would be responsible for your product must be involved in the visit: the field person, the commodities buyer, someone from sourcing, the plant manager, a quality assurance professional and so on. Get into their world. I’ve heard of many companies visiting a plant and coming away with nothing more than a good dinner. Have questions prepared for each person at each location. For cornmeal breader, these would include the following:

How long does the corn grow?
What is the yield per acre?
What is the cost to grow per acre?
What is the conversion from bushel to corn meal?
What happens to the waste?
How many employees work in the plant?
What is the average hourly wage?
How long is the production time?
What capacity do you run at?
Tell me about your safety program.
How many accidents happened last year?
What were they?
What makes a great customer?
What are your biggest challenges?
What are you most proud of?

Yes, these questions can seem endless, but winners want to work with winners, and intelligent, thoughtful questions build mutual respect.

When you leave the farm or facility, take time to send a thank-you note to everyone you spent time with. I always carried notecards with me so I could write them on the plane ride home. I assure you that this small gesture means you will be remembered.

Next, think about your goals, both financial and others. In our cornmeal breader example, you would be of course striving for a good price, but what else should you consider? Think outside the box. Maybe it’s the growth incentive of the product, bundling other products, a seasonal promotional discount or inventory turns. Once you are negotiating, you may be too hurried to think of every objective.

Likewise, consider the supplier’s goals. The key to a successful negotiation often is the ability to put yourself in someone else’s shoes. Empathizing does not mean agreeing, but it sure goes a long way.

Then, determine your timeline. This is extremely important, as the suppliers has other customers, and neither of you want surprises.

Finally, think win-win. Be a great listener to pick up on what is important to them and compare that to your own goals — and the goals you thought were theirs. In case you need to pivot along the way, have a plan in place and know your options. Always try to keep calm. If necessary, step away or take a break to diffuse the tension. Silence is golden; use it when necessary. And never make important decisions on the spot.

EDITOR’S NOTE: This is the final “Executive View” authored by Janet Duckham. SCM Now magazine would like to thank her for her service and wish her all the best for her future endeavors.

ASCM Unveils Top 10 Supply Chain Trends for 2021

Fri, 18 Dec 2020 00:00:00 -0600

I recently read a fascinating Wall Street Journal article that detailed the incredible inner workings of COVID-19 vaccine mass distribution. As I learned about the complex, highly synchronized, collaborative effort, I couldn’t help but think of ASCM’s Top 10 Supply Chain Trends for 2021, developed by ASCM’s Research, Innovation and Strategy Sensing Subcommittee.

Let me highlight a few of them: One trend involves enhanced visibility by taking a more proactive approach to digital supply chain. In the coming year, our experts believe more businesses will create fully integrated, end-to-end networks. Furthermore, information-sharing and global data standardization are set to shift the focus from putting out fires to predicting them.

It’s no surprise that vaccinating the world begins with the complete integration of factory workers, ultracold freezers, data scientists, truck drivers, pilots, dry ice, health care workers — all converging simultaneously at thousands of locations. “Every one of the many and complicated links of the chain has to hold,” the Journal authors write. This will be impossible without a visionary digital approach.

Next up in the voyage: trucks that transport the vaccines to airports and distribution hubs, while keeping them at a brisk -94 degrees Fahrenheit. It’s a huge challenge, but the good news is that temperature, light exposure, location and jolting are constantly monitored. “We actually know every moment in the journey,” says Mike McDermott, president of Pfizer’s global supply chain.

Here, the corresponding ASCM trend is the continued rise the internet of things (IOT). The IOT will revolutionize supply chains by increasing visibility and real-time tracking. This will make networks more responsive and competitive in the future.

Even though Pfizer has instituted safety measures, there have already been cyberattacks aimed at the companies and organizations distributing vaccines. It’s unclear whether the goal was sabotage or theft of the refrigeration technology.

Cybersecurity is a prerequisite for survival, ASCM’s Top 10 notes. The explosion of data and data-driven organizations through artificial intelligence, blockchain and the IOT is creating much more interwoven areas of vulnerability. Supply chains must protect their networks, devices, people and programs.

Furthermore, vaccinating the world requires a simultaneous, mass distribution of saline, face masks, needles, syringes, alcohol wipes, and other supplies used during the actual administration of the shots. As Bruce Gellin, president of global immunization at Sabin Vaccine Institute, points out: “Having syringes without vaccines isn’t very helpful.” And vice-versa.

Meanwhile, delivery networks are being stretched thin by a pandemic-fueled surge in online shopping. As our trend-setters note: E-commerce is forcing companies to create new and innovative last-mile delivery solutions, such as turning retails stores into fulfilment centers or delivery vehicles into pickup points.

All of this really comes down to one thing: resilience. Whether it’s spoilage, delivery timetables, quality control or cyberattacks, successful supply chains can only support patients and customers if they are resilient.

Which brings me to number-one on the ASCM Supply Chain Trends for 2021: resilience as a key focus of risk prevention. Supply chains are complex, global and increasingly interconnected. When one part of the network is exposed, all face disruption. Take a look at the full list here. The lessons inside will help the global supply chain community keep a sharp focus on supply chain resilience to succeed in 2021 and beyond.

Eliminating Last-Mile Environmental Inefficiencies

Wed, 16 Dec 2020 00:00:00 -0600

As the world grappled with a pandemic this year, many consumers shifted to ordering more products and meals online to comply with social distancing and stay-at-home guidelines. As a result, businesses faced a huge spike in e-commerce sales and last-mile delivery demand.

This has accelerated the e-commerce trend industries already were seeing. Last year, Logistics Management reported that online orders, which only made up about 10% of total global purchases, were growing rapidly, requiring faster click-to-order processing times, constant communication with the customers and faster deliveries (Ous 2019). There likely will be more than 250 million e-commerce users by 2021 (Raju 2019).

As convenient as this service is for consumers, there are several components of last-mile delivery that create environmental inefficiencies. As pressure to reduce supply chains’ impact on the environment increases, last-mile delivery growth could result in more emissions and waste from

more delivery trucks on the road and thus more traffic
the use of environmentally inefficient self-owned vehicles by gig workers making deliveries
more packaging, including boxes, bags and envelopes; protective stuffing, such as packing peanuts or inflated bubble plastic inserts; and take-out food containers and utensils
product damage.

SHORTENING THE LAST MILE

One of the primary ways suppliers are working to reduce adverse environmental effects is to decrease the distance between the nearest distribution center and the consumer. In the past, large distribution centers measuring 1 million square feet or larger were built in more remote areas where land was inexpensive and access by rail or trucks was convenient. These large centers also were efficient and relatively inexpensive to operate. On the negative side, they were farther away from consumers. Today, micro-fulfillment centers as small as 10,000 square feet are being built closer to consumers.

In some cases, especially with grocery companies, retail stores are being used as fulfillment centers. A personal shopper employed by the store or a third party can pick the ordered items from store shelves and pack them for in-store or curbside pickup or home delivery. These services have become even more popular as a result of the pandemic because they enable shoppers to avoid entering a store and coming in contact with more people. Consequently, stores that did not have curbside pickup service already in place have had to quickly adapt (Hensel 2020).

There are a couple of downsides to this strategy, though. Personal shoppers can interfere with other customers shopping in the store, such as by blocking aisles with large carts used for picking orders. Some companies are experimenting with a dark store concept in which no customers are allowed in the store, and employees can pick orders for customers (Meyersohn 2019).

Secondly, although curbside pickup reduces the number of deliveries the store’s distributors would have to make, the customer still has to make a trip to the store to pick up the order. However, if the customer plans the pickup stop as part of a longer trip to make several different stops, the journey can be more eco-friendly.

GREENER TRAVEL

In addition to working to shorten the last mile, companies are experimenting with more environmentally friendly vehicles to make the journey. Amazon, FedEx, UPS and others are exploring electric vehicles (EVs), for example. Although these vehicles produce fewer emissions, they do require a lot of electric energy to power them. If that energy comes from fossil fuels, the net environmental gain is reduced (Laughlin 2019). EVs also require batteries. Lithium ion batteries are the popular choice right now, but they tend to be expensive and are susceptible to fires (Dawson 2019). Extensive work still is required to improve batteries.

In theory, electric and hybrid vehicles chart a clear path to lower emissions. Even when the costs of making the batteries and generating the electricity that feeds them is taken into account, most estimates suggest that these vehicles emit roughly half as much greenhouse gases as a gasoline car (Sindreu 2019).

Other fuel-efficient delivery vehicles also are being considered, such as sidewalk robots that are designed to travel slowly for increased safety. Slower speeds give the robots more time to process information and give teleoperators a chance to intervene, if needed. This is especially important because sidewalk environments are different than street environments, as fewer rules govern the paths of pedestrian travel and how to enter and exit the walkways. As a result, special traffic spaces may need to be allocated on sidewalks in order for these robots to be useful. In addition, their productivity is limited by their small carrying capacity.

Drones were being used to deliver lifesaving medical supplies to remote areas as early as 2016 (Jackson 2019). They can fly at a speed of 80 miles per hour and carry 1.75 kilograms of cargo. Zipline, the company managing the service, has reduced the time from receipt of order to launch of a drone from 10 minutes to 60 seconds.

These nontraditional delivery services are likely to find applications. However, they probably won’t have widespread use anytime soon. Many up-and-coming delivery techniques — including autonomous vehicles — will require years of testing before they can be fully rolled out for use.

One lower-tech option is crowdsourced delivery services, which could be particularly suitable for e-commerce. The idea is that a neighbor could pick up another person’s package while they are traveling anyway and deliver the package to the customer. Although this method could offer some benefits in terms of reduced pollution and congestion by replacing dedicated freight trips, the impacts of crowdshipping are unclear and depend on several factors, such as the transport mode used, the match between supply and demand, the length of detours, and possible induced demand (Simoni et al. 2019).

OPTIMIZED ROUTES

All of the major carriers optimize the routes their delivery vehicles travel during a normal day. As last-mile deliveries increase, routes will need to be more variable, and delivery companies will need to employ route optimization technology to avoid unnecessary travel.

For example, UPS’s On-Road Integrated Optimization and Navigation (ORION) program’s algorithm includes the commitment times for package deliveries and customer pickup times, and routing is created as the packages load (Kaplan 2019). “We’re saving on average six to eight miles per driver per day,” a UPS spokesperson said in a statement. That eliminates 100 million miles driven each year, saving 10 million gallons of fuel. ORION was fully deployed by fall 2016 and saves $400 million per year in gas and labor. UPS will begin testing the next generation of ORION this year. The current version is static, setting a route before the driver begins delivery. The updated program will dynamically change the route navigation, optimizing it throughout the day based on real-time information about traffic congestion, road conditions and requests for new package pickups.

This strategy goes hand in hand with efforts to reduce the number of deliveries overall. For example, if retailers extend their delivery time frames from the now-expected one-hour or two-day windows into a week-long time frame, the delivery company can better prepare for deliveries and optimize loads and routes. Another option could be to encourage consumers to make fewer large orders instead of many small, frequent ones.

REDUCING PACKAGING WASTE

Packaging is a bit of a mixed bag when it comes to e-commerce and omnichannel deliveries. Packaging tends to be fundamental for protecting products during shipment, which in turn reduces product waste. However, there often is more product waste because more packaging is needed in general. For example, multiple similar items can be shipped to a store in the same box, or the items may arrive wrapped to a pallet. Instead, items that are shipped directly to a consumer’s home require their own boxes or bags. Although companies are making strides in using recycled and recyclable materials in this secondary packaging, if consumers do not know how to recycle the packaging or do not make the effort to recycle it, there will be even more waste.

To minimize packaging waste, retailers are starting to skip the secondary packaging for items that already come in a box. Product manufacturers are assisting with this effort. Procter & Gamble’s (P&G’s) Eco-Box packaging innovation supports a ships-inown-container delivery model. “Eco-Box products arrive on the consumer’s doorstep as a sealed, shipping-safe, corrugated box — with no wasteful outer boxing or padding needed,” Pat Reynolds (2020) writes for Packaging World. The new Tide Eco-Box, for example, contains less packaging, 60% less plastic and 30% less water than the current 150-ounce Tide press-tap package. It also is lighter because of its ultra-compacted formula and takes up less space because of its boxed design, which means more containers can fit on fewer delivery trucks. “We know that the ‘last mile’ remains the biggest challenge both economically and ecologically in e-commerce,” said Isaac Helleman, brand manager for e-commerce innovation in P&G’s Fabric Care group, in a statement. “The Tide Eco-Box is designed to keep the convenience of online shopping for the consumer but reduce the overall impact of that convenience on our environment.”

THE (TRIPLE) BOTTOM LINE

Last-mile delivery has become an essential retail offering. Speed, accuracy and reliability can make or break the customer experience. However, waste in its many forms can create serious ecological challenges. As last-mile deliveries continue to increase in number and scope, companies will have to figure out how to use the above-listed technologies and strategies as well as emerging ideas for the benefit of people, planet and profit.

REFERENCES

1. Dawson, Chester. 2019. “Burn Notice.” Bloomberg Businessweek, April

2. Hensel, Anna. 2020. “As retailers reopen, curbside pickup experience will be the key to success.” Modern Retail, May 12. https://www.modernretail.co/retailers/ as-retailers-re-open-curbside-pickupexperience-will-be-the-key-to-success/

3. Jackson, Tom. 2019. “Forget Pie in the Sky, Drones are Saving Lives.” Fortune India.

4. Kaplan, Deborah Abrams. 2019. “UPS and Amazon: A tale of 2 last-mile sustainability strategies.” Supply Chain Dive, January 15.

5. Laughlin, Lauren Silva. 2019. “Who Willed the Electric Car? China, and Here’s Why.” The Wall Street Journal, October 11.

6. Meyersohn, Nathaniel. 2019. “Why supermarkets are building ‘dark stores.’” CNN Business, October 31. https://www.cnn.com/2019/10/30/ business/grocery-delivery-pickup-walmartkroger-stop-and-shop/index.html.

7. Ous, K. 2019. “Packaging’s new role in e-fulfillment.” Logistics Management 58, no. 2: 38-42.

8. Raju, Riya. 2019. “How to Tackle Last-Mile Delivery Challenges Using ‘The Best’ Technology.” SupplyChain247, September 1. https://www. supplychain247.com/article/how_to_tackle_ last_mile_delivery_challenges_using_ technology/locus.

9. Reynolds, Pat. 2020. “P&G Greatly Expands Eco-Box Portfolio.” Packaging World, April 22. https://www.packworld.com/issues/article/ 21129929/pg-greatly-expands-ecobox-portfolio.

10. Simoni, Michele D., Edoardo Marcucci, Valerio Gatta, and Christian G. Claudel. 2019. Potential last-mile impacts of crowdshipping services: A simulation-based evaluation.” Transportation. http://dx.doi.org/10.1007/s11116-019-10028-4.

11. Sindreu, Jon. 2019. “In the Green Transition, Transportation Is the Next Big Baddie.” The Wall Street Journal, December 23. https://www.wsj.com/articles/ in-the-green-transition-transportation-is-the-nextbig-baddie-11577119404.

ASCM and IBM Collaborate on Supply Chain Risk Assessment Proof of Concept

Fri, 11 Dec 2020 00:00:00 -0600

Supply chains can be as complicated as they are simple. It’s the matter of getting parts and products from point A to point B, on time and intact. But broaden the scope, and supply chains become exponentially more complicated and sometimes even fragile. A single glitch in a small section of a national chain can disrupt or bring down the entire enterprise.

This is why predicting bottlenecks to maintain system flow and continuity has become increasingly critical. Whether the supplies are manufacturing parts or vaccines with incredibly sensitive requirements, understanding of potential weak links in the supply chain is needed now.

ASCM recently committed to work with IBM to tackle this very issue with artificial intelligence (AI) and hybrid cloud. We plan to develop an AI-driven, Supply Chain Operations Reference Digital Standard (SCOR DS)-based supply chain stress test and resilience indicator that will leverage IBM AI capabilities on the IBM Cloud.

Working hand-in-hand with IBM’s renowned Data Science Elite Team of data scientists, the goal is to develop a risk assessment tool on IBM Cloud Pak for Data, the company’s integrated data and AI platform. The tool is intended to automatically assess the degree of both tactical and strategic resilience, as well as any needed course corrections. Leveraging this intelligent risk identification and scenario testing, the objective for the SCOR DS framework will be the creation of a combination of AI methodology and ASCM-certified best practices for a best-of-both-worlds offering.

Performance data comprises many elements, such as delivery reliability, responsiveness, agility, supply chain cost and asset management efficiency. Resilience factors also include material flow and the physical network; information flow within and among stakeholders; and SCOR DS plan, source, make, deliver, return and enable process stability.

Exciting collaborations such as this one prove that the toughest challenges can be addressed when we stand united. Together, we can build the kind of supply chains that have the power to make a positive impact across the globe.

Read more about the IBM Data Science Elite Team.

Statements regarding IBM's future direction and intent are subject to change or withdrawal without notice and represent goals and objectives only.

COVID-19 Fuels Slavery in Our Supply Chains

Fri, 04 Dec 2020 00:00:00 -0600

The effects of COVID-19 are apparent and all around us. However, one of the less evident consequences is how the pandemic is influencing those who suffer from social and economic inequalities; who face sex, race, age or disability discrimination; and those without basic services, such as housing, drinking water, sanitation or education.

“The pandemic is fueling slavery and sexual exploitation,” a United Nations (UN) report warns, citing “a direct link” between COVID-19 and the risk of exploitation. This includes children and adults being victims of forced or debt-bonded labor, as well as being sold and trafficked.

“These practices have increased in the past months,” the UN experts write. “In some cases, victims are further subjected to ill-treatment, torture or even disappearance when they are prevented from informing as to their fate and whereabouts and put outside the protection of the law.”

This past week, we recognized the International Day for the Abolition of Slavery. December 2 marks the day in 1949 that the UN General Assembly adopted the first convention to fight human trafficking.

According to the International Labour Organisation (ILO), more than 40 million people worldwide are victims of modern-day slavery. This term refers to situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, deception or abuse of power.

In addition, the ILO states that more than 150 million children are currently subject to child labor. This accounts for a shocking one in 10 children globally.

Inspiring purposeful global engagement

In the most recent edition of SCM Now magazine, Editor-in-Chief Elizabeth Rennie interviews PYXERA Global CEO Deirdre White. PYXERA Global’s mission is to reinvent how international players engage to overcome global challenges. The organization does this by something White calls “trisector partnerships,” which leverage the unique strengths of public, private and social interest organizations to give communities the knowledge and tools necessary to solve complex problems.

In the interview, Rennie and White discuss strategies for ensuring ethical and equitable supply chains. “The most pressing problems that the world faces today — COVID-19, structural racism, climate change — are all deeply rooted in systemic challenges that have no respect for borders or sectors,” White says. “Despite the monumental challenges we face, there are awe-inspiring opportunities to correct course, and we should be energized by the prospect.”

She adds that supply chain professionals are in a unique position to set new, world-changing standards and hold themselves and others accountable. “Don't miss this unparalleled moment in history when institutional investors, corporate leaders, customers and employees are in unprecedented alignment — and when the world so desperately needs leadership,” White urges.

Everyone in supply chain has a role to play in the effort to eradicate slavery while safeguarding and supporting our most vulnerable populations. Read about PYXERA Global’s strategies in the interview, then gain additional insights from industry experts and thought leaders in the pages of the award-winning SCM Now.

5 Ways to Reinvent Holiday Shopping This Season

Wed, 02 Dec 2020 00:00:00 -0600

The 2020 holiday shopping season is already proving to be unlike any other. The global pandemic has made a huge impact on in-store shopping, and retailers large and small are getting creative and scrappy with strategies for inventory management and online sales. That doesn’t mean that in-store shopping is obsolete, but it’s definitely undergoing a transformation. Here are five ways holiday shopping will be different in 2020.

1. First, we’re currently witnessing that Black Friday is no longer a single day, but a week (or longer) of online deals and discounts. For years, store opening hours on Black Friday have been of utmost importance to the customer. Yet this year, timing isn’t important, so much as the online deals, inventory assurance and gift inspiration.

2. Retailers can use apps such as FaceTime and WeChat to bring customers around the store virtually. They might also consider hosting livestreaming events in store. Burberry recently did this, and the livestream event garnered more than 1.4 million views and sold out most products within the hour. Brick-and-mortar retailers should also consider using a reservation app to allow shoppers to reserve a spot in the store as a way to maximize their shopping time.

3. Despite recent struggles, malls still have the ability to provide one-stop-shop convenience and inspiration for consumers looking for gifts. Providing a list of these items and the ability to purchase with curbside pickup will meet the needs of consumers looking for the element of discovery, while emphasizing safety and convenience. Malls can also offer gift-wrapping services for curbside pickup orders as a way to continue to provide specialized service.

4. Consumers will demand a seamless omnichannel experience that enables discovery, inspiration and exploration on digital channels. Proper inventory tracking should be used to limit store trips, as a recent Google survey found that 67% of shoppers plan to confirm online that an item is in stock before going to buy it. As mentioned previously, virtual shopping will allow customers to have a personalized shopping experience without going into stores.

5. Small businesses should identify which customers might be up for grabs this holiday season, as the Google survey also found that 66% of shoppers plan to shop at more local shops. These retailers should also consider offering personalized virtual shopping experiences, based on preferences; make sure to follow up with customers to confirm they are fully satisfied; and provide a platform for human connection. After all, everyone is looking for more ways to unite in this isolated world.

The 2020 holiday shopping season seems daunting to many retailers right now, but with all of the changes they’re facing, there is great chance for reinvention. Retailers can use this opportunity to change for the better and continue growing their business.

Grow the Supply Chain Community Through Mentorship

Tue, 01 Dec 2020 00:00:00 -0600

Take a moment to reflect on your career and find examples of people who have guided you, given you structure or inspiration, or brought clarity when there seemed to be none. These are the people to think about when you have an opportunity to mentor another professional.

Mentors can take on a variety of forms, but are especially critical for helping young professionals or new employees succeed. Guidance can be as simple as assisting the mentee as they navigate the unwritten workplace rules or connecting them with other supportive members of the organization.

At IBM, structured mentorship is encouraged at all levels. It is something that we start on a practitioner’s first day at the company. As the supply chain practice continues to grow, I make an effort to get to know every new entry-level practitioner. It’s a small gesture to show my new hires that they are entering a space that serves to support them. Those first few years in the field are when foundations are built and paths are paved for the future. Having a mentor during that time to help navigate uncertainties and serve as an advocate is so important.

In other cases, the mentorship relationship can be cultivated between people who know each other through a professional organization, such as ASCM, or even former coworkers who can offer career advice or fresh perspectives on workplace challenges.

Great mentors provide an ear to listen to challenges and a guiding hand to solve them. They do not solve the problem for the mentee; rather, they help mentees find their own resolutions. This sparks creative thought and provides a foundation for growth. In addition, great mentors have both the experience and the empathy to understand how and when to step in and offer counsel. They know just the right amount of support to give, which will vary for each mentee.

I have often found that a great mentor will even present a challenge, knowing the mentee will gain valuable insights from the experience. I’ve learned from my own mentors that they did not immediately feel that they were necessarily helping me by doing this. And that’s okay — because I did benefit from these teachable moments. By learning to look at an issue from a different perspective, I gained insights that I did not have before. This iterative process of exploring different ways to find a viable solution often enabled me to overcome a challenge that I faced at that specific moment and provided me with the resilient mindset I needed to cross similar hurdles in the future.

MANAGING THE MYTHS

There are a few myths or misunderstandings about the mentorship relationship that I’d like to address. First, mentees are not the only ones who benefit. Mentors increase their understanding of human perspectives and are often reinvigorated by the excitement and passion of the young professional.

In addition, mentors and mentees may not always feel an instant connection. My mentors and I did not always share similarities. But this disparity in our characters did not hinder our relationship. Instead, it helped me gain an appreciation of the variety of experiences people bring to business and showed me that there is more than one way to solve a challenge.

Lastly, mentorship is not just for helping young professionals. It is something that should be sustained throughout careers. It strengthens professional networks and invigorates progress with new ideas. It is imperative that we continue this cyclical process and pay it forward by passing on knowledge and supporting peoples’ lives and careers. This is how we can all leave an indelible mark on the supply chain field.

The ASCM Mentoring Program offers supply chain professionals an easy way to connect online and establish mentor or mentee relationships that foster personal and professional growth and development. Take advantage of the wide network of supply chain professionals that are actively involved with ASCM. Learn more today.

Restoration Through Appreciation

Fri, 27 Nov 2020 00:00:00 -0600

The first Thanksgiving feast was shared on Thursday, November 26, 1621. For more than 200 years after that initial celebration, each state observed its own Thanksgiving holiday at different times throughout the year. Interestingly, it was in 1863 during the Civil War that President Abraham Lincoln declared an official U.S. holiday of Thanksgiving. In his proclamation, he described the war as unequalled in magnitude and severity. Creating a national day of thanks was, in Lincoln’s words, a way to “heal the wounds of the nation and to restore it.”

For the global community, this past year has also felt unequalled in magnitude and severity. I doubt anyone imagined the devastation we have faced, nor how a virus could so profoundly change nearly every aspect of our lives.

On behalf of the entire team at ASCM, I’d like to offer a small word of thanks in hopes of healing some wounds and moving the world toward a much-needed restoration. We are grateful for the supply chain professionals who put themselves on the front lines, sacrificing so others can get the health care they need, access daily essentials and maintain some sense of normalcy despite the chaos. The following is certainly not an exhaustive list, but we honor

agriculture and food producers, for ensuring we have food for our grocery store shelves
the retail workers who stock those shelves, place and receive inventory, and staff stores
critical manufacturers who produce essential materials, components and products — particularly those protecting our health care workers with vital medical equipment and supplies
logistics, transportation and distribution professionals for storing and moving products, providing public transit services, delivering mail to our homes, and soon ensuring successful vaccine distribution
energy, utility and infrastructure workers who ensure we receive clean water; electricity; gas and other fuel; internet and communication services; garbage and recycling services; and continued access to safe roads, bridges and other civic infrastructure
janitorial and cleaning professionals for sanitizing and safeguarding our facilities at a time when it’s most crucial.

And finally, thank you to so many other members of the global supply chain community who go to work every day, risking exposure so others may be protected and cared for. It’s because of you that the world no longer takes supply chains for granted. Furthermore, you inspire us all to work harder to create a better world through supply chain.

ASCM Thanks Chain

As a way to come together in the spirit of gratitude, ASCM recently launched the ASCM Thanks Chain. I invite you to join us by showing appreciation to those who have helped you along your supply chain journey. Share your story on social media, tag the person you want to thank in your post, and include #ASCMThanksChain. The goal is to form the longest thanks chain, which will be featured in an upcoming ASCM blog.

Happy Thanksgiving to our ASCM members here in the United States. And to our international colleagues, we wish you countless things to be grateful for now and in the coming year.

Collaborate Early to Reach Cost Targets at Product Launch

Mon, 23 Nov 2020 00:00:00 -0600

Professionals tasked with new-product introduction at tier one automotive suppliers face multifarious challenges: They must accelerate the advancement of disruptive technologies that continue to reshape mobility. As modules are comprised of constantly changing bills of material (BOMs), with evermore sensors and options, these professionals strive to keep costs low to ensure sustainable program profits. Meanwhile, they are developing and launching current systems to meet original equipment manufacturer (OEM) start-of-production (SOP) dates.

With disruptions happening all the time, supply chain professionals are constantly challenged to work in newer, more agile ways. The ability to commercialize future disruptive technologies largely hinges on the ability to collaborate more closely both inside and outside the four walls of the business — especially for tier one automotive suppliers. However, if stakeholders join forces to more efficiently act on early BOM data, the productivity gains will help their supply chain organizations thrive in the evolving mobility landscape.

To uncover what specific actions leading automotive tier one suppliers take in order to better meet cost targets, supply chain services and software technology company IndustryStar Solutions and the Haworth College of Business at Western Michigan University in Kalamazoo recently conducted a comprehensive survey. Professionals at 16 tier one suppliers were interviewed about their new-product introduction processes. These individuals represented companies including AAM, BorgWarner, Denso Corporation, Inteva Products, Lacks Enterprises, Lear Corporation, Magna International, Singh Vision Systems, Toyota Boshoku Corporation and Veoneer-Nissin Brake Systems.

In addition to the interviews, IndustryStar Solutions and Western Michigan University conducted extensive experiments to reveal what actions brought about the greatest results. They realized two key discoveries:

First, companies that collaborate earlier in the new-product development process tend to be more satisfied with their ultimate program cost results, generate larger profits and enjoy a clear competitive advantage by being first to market with new innovations. The value potential is clear, with 75% of respondents saying this kind of collaboration helped optimize new-product introduction and reduce ongoing production cost. In addition, 88% said collaboration resulted in a competitive advantage, 81% plan to increase collaborative efforts in the future, and 94% want to start even earlier in the production process.

Second, collaborative new-product development efforts also create the potential for future value. Unfortunately, the suppliers surveyed said that unexpected headwinds often make it difficult to realize that value. Only 31% of suppliers are currently satisfied with their results, and 69% say they lack a clear process to integrate with tier two suppliers.

Following are five steps that the IndustryStar Solutions and Western Michigan University research indicates can help automotive tier one suppliers better meet cost targets. Although the research was specific to the automotive industry, these lessons can be applied at all kinds of businesses and supply chain organizations.

Consolidate multiple BOMs to eliminate repetitive work. The first step is transitioning from separate design, engineering, procurement, manufacturing, supplier quality and logistics BOMs into a single, common, early-module BOM. This is no small task, but it can be accomplished by crafting a plan to diligently consolidate versions into one master template. Typically, various automotive tier one departments each have similar early BOM templates that contain repetitive commercial and technical data, such as part numbers, descriptions and quantities. These data inputs can be quickly merged to bolster process consistency and reduce human error.

After the consolidation, each function’s specific data inputs should be added in and formatted into columns. It is also helpful to format process data sequentially, such as by organizing data inputs by the order of completion date within the program life cycle. For instance, the engineering drawing release date should come before the purchasing expected quote response date. Lastly, including a column that lists the leads of each BOM data input section can smooth the transition from functional BOMs while promoting accountability and reducing repetitive data tracking.

Segment parts into categories. There are several common best practices for organizing modules into categories in order to enhance communication, advance execution and gain earlier cost insights. Categorizing each part allows cross-functional team members and company leadership to efficiently filter data and glean the desired information. As an example, categorizing parts enables people to quickly filter data and find out that purchased wiring harness assemblies make up 13% of an overall module’s costs — 4% higher than target costs. This information then could be acted on in the design phase, potentially spurring the selection of alternative connectors or the quotation of alternative, lower-cost suppliers.

As a point of reference, the most common category approaches for organizing module BOMs are

level
commodity (typically general baskets of like components)
manufacturing process
raw material
part types (purchased/common, modified or custom)
ABC criticality
lead time.

In order to support the goal of maintaining one common BOM across all business functions, each of these categories should be tracked in the standard BOM.

Deploy an automated plan for every part. Creating one company master BOM template in a spreadsheet can work, but increasingly tight OEM timelines and additional complexity are starting to form dents in homegrown tools. Left unchecked — especially with multisite, global teams — the system can quickly revert to multiple offline BOMs.

Forward-thinking suppliers are accelerating new-product development by deploying automated plan-for-every-part (PFEP) cloud tools in order to bridge the technology gap between product life cycle management (PLM) and enterprise resources planning (ERP) systems. Automated PFEP software enables multiple cross-functional team members to view, edit and track changes in real time. Further, application programing interfaces (APIs) can be easily connected to PLM software so that the latest part engineering change notices are pushed automatically.

Once a program transitions to production, APIs also can push final module data — for example, part quantities, weights and costs — to the ERP system in order to dramatically reduce the time it takes to process and enter data. Results include meaningful productivity gains, product- development cost reductions, time-savings and reduced risk.

Use PLM software to better manage changes. Leveraging APIs to connect with automated PFEP and PLM tools saves team members a lot of time because the latest part data is automatically pulled from engineering. Furthermore, there are fewer engineering inquiries about early part supplier feedback. This alone can be worth deploying automated PFEP software, but the supply chain organization will also benefit from earlier access to part design, manufacturing processes and assembly data. This can help shape supplier development and strategic sourcing paths. Then, it’s possible to take the associated time-savings and spend them advancing critical new commodity relationships and high-impact negotiations.

Purchasing teams also spend many hours tracking and reporting on part-revision costs and timing impacts. To address this problem, changes to part cost and lead time also can be automated using PFEP software. When cross-functional teams can review and analyze early commercial changes in real time, the result is an intelligence treasure trove. When combined with other newfound opportunities, it also helps business leaders support their teams by identifying and remediating headwinds faster — and without the feeling of being micromanaged.

Digitize reporting dashboards to better meet cost targets. Program cost targets that are set up front, tracked throughout the process and communicated often have a better chance of being met at launch. Entrusting extended teams with advanced module data leads to inspired, creative, cost-reduction breakthroughs. For instance, mapping early module BOMs into user-friendly dashboards with the latest program information throughout development results in swifter decision-making based on the very latest information.

Similarly, real-time access to digital dashboards with cost information about programs in development is a key enabler because it empowers team members to act decisively. This is a key point: Access to information is not enough; an aligned, cross-functional team is paramount to success. Making these significant company culture adjustments can take time, but it is well worth the effort to achieve such meaningful efficiencies and advances.

ACCELERATING FUTURE TECHNOLOGY COMMERCIALIZATION

The mobility landscape is evolving rapidly, with a wide range of new technologies continuously reframing future vehicle systems. As the sector continues to reinvent itself through new technologies and services, supply chain will play a greater role in new-product introduction. To maximize the opportunities, empower teams with better tools that facilitate superior collaboration.

Trend-Setting Shifts Continue in Pharma

Fri, 20 Nov 2020 00:00:00 -0600

With big vaccine announcements from both Pfizer and Moderna over the past couple of weeks, the pharmaceutical supply chain has been all over the news. But now, we’re turning our attention to a different aspect of the industry: home delivery of prescription drugs. Amazon has just announced that it rolled out the service, featuring discounts of up to 80% for Prime members and free, two-day prescription delivery. Available in 45 states, users also have access to a pharmacist-staffed help line and a discount card for those who are uninsured.

The health care and pharmaceutical sector is vast, and disruption is not uncommon. However, as most of us are accustomed to going to our local pharmacies to pick up prescriptions, some experts believe the current system is relatively ingrained. Furthermore, switching to a new pharmacy often requires a doctor’s visit, which many people are shying away from, with virus outbreaks once again on the rise.

On the other hand, a global pandemic may offer Amazon the perfect opportunity to get consumers comfortable with ordering their prescription drugs online. “More and more people look to complete everyday errands from home,” said Senior Vice President Doug Herrington in an Amazon press release. “Pharmacy is an important and needed addition to the Amazon online store.”

Analysts predict the new prescription drug delivery service will have a devastating effect on smaller drugstores. For the larger players, the announcement has already reverberated through the industry, with shares of CVS, Rite Aid and Walgreens sinking 9%, 16% and 9%, respectively, on Tuesday.

“The entire supply chain for prescription drugs could ultimately be disrupted,” Jonathan Ponciano writes for Forbes. He adds that $350 billion is spent on prescription pharmaceuticals each year, presenting a huge opportunity for Amazon and further supporting the wisdom of establishing an online pharmacy.

Make an impact at ASCM CONNECT 2021

If 2020 has taught supply chain professionals anything, it’s that our industry is always transforming. It’s with this in mind that we are creating ASCM CONNECT 2021, a hybrid conference experience, taking place October 24-26, both in San Antonio and virtually. One of our learning pillars is emerging trends, which will feature presentations to help our participants stay on top of major developments and learn about what’s driving innovation in supply chain.

In addition, the dynamic fulfillment learning pillar is designed to help attendees streamline and optimize logistics, transportation and distribution — including warehousing strategies, pick, pack, shipment and much more. ASCM CONNECT also features presentations about intelligent supply, operational excellence, synchronized planning and much more.

If you have expertise in one or more of these learning pillars, ASCM invites you to submit an abstract to the ASCM CONNECT 2021 call for presentations. The call is open through Monday, December 7. Don’t miss this opportunity to share your strategies, case studies and best practices as an educational session presenter. In addition to gaining recognition and building connections with supply chain colleagues from across the globe, your insights are valuable to the entire ASCM community and an important part of making the conference a success. Learn more and submit an abstract today.

Soar Through Your Next Software Pilot Test

Wed, 18 Nov 2020 00:00:00 -0600

Regardless of your role within a company, you’ll have to deal with software updates and changeovers as your organization continues to keep up with the latest technology. Sometimes it seems like software and interfaces change every few months — and as soon as you get used to the most recent version, there’s something new to learn. Not everyone will embrace the changes, either. Some will hesitate to transition and want to stick to legacy versions rather than learn the ins and outs of the new design. Others will worry that the new platform will not support day-to-day operations as intended or make work even harder to do — and that’s a valid concern.

Is there a chance that your company could implement a new piece of software and it just won’t work? It’s definitely less likely if you do your homework first.

As a business analyst, I’ve helped clients around the globe prepare for and execute go-live initiatives for enterprise resources planning, advanced planning and scheduling, and warehouse management systems (WMSs). Throughout the course of many projects, I’ve learned that a successful go-live — the day the organization flips on the switch — requires months or even years of preparation.

Plan and pilot

No matter how much we try to simulate real-world scenarios in testing, the limited testing data and scenarios will deviate from real situations, at least to some extent. This means there’s still a risk of go-live day being challenging, to say the least. Users will undoubtedly encounter some issues that were not previously uncovered. If they are large enough, they could slow down or stop business — an interruption most companies can’t afford.

The best course of action is to do a pilot test before going live. Similar to beta testing, pilot testing essentially rolls out the new tool for certain users or business units to see how the new system affects day-to-day operations. Alternatively, if a company is launching a new supplier relationship portal, the solution could first be introduced to a few trusted suppliers or even a few internal suppliers who can help ensure that all parts of the application are working well. This way, if there are challenges, any interruptions will be limited in scope.

Pilot tests are a simple, effective and proven solution for mitigating go-live risks, and their relevance only increases as the uncertainty and complexity presented by the adoption of new technology also goes up. The goal is to uncover process gaps, system issues and other user challenges, and then address them before the solution is launched for all users. This is especially critical for high-impact technology solutions that influence the majority of an organization or are intended to deliver a key competitive advantage.

For example, one of my clients, a leading manufacturer and distributor of construction-related products, was looking to transition from its paper-based warehouse operations to a radio frequency identification-enabled WMS at one of its plants So, we chose to conduct a pilot test for this drastic shift in operations. We recruited an internal customer and a trusted supplier for the pilot test and funneled all of their orders through the new WMS to ensure that the system was properly configured to handle business needs and to teach some of the internal stakeholders how to conduct their operations using the new technology.

The exercise proved to be very useful for the organization and the project team. It provided warehouse users end-to-end exposure to all the processes. More importantly, the testers uncovered some technical issues. Because only a couple of small business areas were affected by the test, we were able to take our time and fix the issues properly. After a three-week pilot test, my client was able to smoothly expand the new system to cover all of its customers and suppliers.

Technology changes are not always easy, but they certainly become easier when you plan for them and test out the new solution before completely making the switch. And once you have an effective go-live strategy, you’ll be better prepared to handle the steady stream of technology updates that undoubtedly lie ahead.

Supply Chain Leaders Partner to Deliver Life-Saving Vaccines

Fri, 13 Nov 2020 00:00:00 -0600

In 2018, Dr. Ugur Sahin addressed a conference room of infectious disease experts, making a bold — and ultimately prophetic — statement. He announced that his company, BioNTech, could use its messenger RNA technology for rapid development of a vaccine in the event of a global pandemic.

At the time, COVID-19 didn’t exist, and BioNTech had never even brought a product to market. Today, however, BioNTech and Pfizer have developed a vaccine that’s proving to be more than 90% effective at preventing the virus.

“The stunning results vaulted BioNTech and Pfizer to the front of the race to find a cure for a disease that has killed more than 1.2 million people worldwide,” David Gelles writes in The New York Times. Dr. Anthony Fauci says most Americans should be able to receive the vaccine by the end of April.

According to The Wall Street Journal, the United States has ordered 100 million doses, with the option to purchase 500 million more; the European Union ordered 200 million, with an option for another 100 million; and Japan ordered 120 million. The United Kingdom and countries in South America and the Asia-Pacific have also placed significant orders.

This all started back in January, when Dr. Sahin read an article about the virus’s rapid outbreak across China. Convinced that a full-scale pandemic was only a matter of time, he instructed his scientists to immediately begin working on a vaccine.

Sahin says their recent success could mean “the beginning of the end of the Covid era” — which can’t come soon enough, as cities worldwide are fighting yet another new set of spikes. Additionally, more Americans are now in the hospital with COVID-19 than at any other point during the pandemic.

Of course, a major factor in the ultimate success of the vaccine is a working cold chain. With that in mind, Pfizer has built a staging ground the size of a football field, equipped with 350 freezers to hold vaccines before distribution. The company also developed a temperature-controlled shipping container to ensure the doses arrive frozen and effective. The GPS-trackable container holds boxes full of dry ice that can store up to 5,000 vaccines for 10 days at -70 degrees Celsius before requiring re-icing.

The Wall Street Journal adds that Pfizer plans to move about 7.6 million doses to airports every day, partnering with FedEx, UPS and DHL to deliver 100 million doses this year and another 1.3 billion in 2021.

“Ensuring over a billion people globally have access to our potential vaccine is as critical as developing the vaccine itself,” Pfizer Chief Executive Albert Bourla told The Journal.

The power of partnership

Exciting collaborations, such as that of BioNTech, Pfizer and their delivery partners, prove that the toughest challenges can be overcome when we stand united. Here at ASCM, our global network of alliances and thought-leadership collaborations are also fueling supply chain innovation and delivering a portfolio of groundbreaking products and services to members and customers. Together, we’re on our way to building the kinds of supply chains that have the power to make a life-saving impact across the globe.

4 Tips for Distributors to Prepare for Post-COVID-19 Growth

Thu, 12 Nov 2020 00:00:00 -0600

Distributors around the globe are dealing with a stark reality that few, if any, thought possible just a few months ago. Last November, most distributors had big plans for 2020, and many were confident it would prove to be a very lucrative year. But now with COVID-19, some distributors are concerned about their futures. This new reality set in at different times around the globe.

We still don’t know how long business and life in general will be disrupted. With most distributors stuck in wait-and-see mode, it is helpful to focus on the certainties that we can rely on:

The pandemic is not over. It likely will impact different parts of the world throughout the year.
Uncertainty now is a certainty. We just do not know enough about the virus and the situation, and we keep learning new details and prevention and treatment strategies every day.
Supply chains will be affected. Shortages of all types of products will continue throughout the year.
The economy will bounce back, as it always does. Countries around the globe are investing in their economies to get them running again. We just don’t know when the economy will recover.

Distributors must take steps now to strengthen their positions and be ready to deliver. Here are four crucial steps all distributors should take.

1. Be proactive

Just a few months ago, some distributors were planning to hire more personnel because 2020 looked so bright. Now distributors need to make difficult but proactive decisions to scale back expenses. Create a new budget based on different revenue expectations, such as reductions of 20%, 30% or even 50%. Determine if hiring plans should be placed on hold. Identify which current positions can be eliminated if workdays? Decide now and take the necessary steps to make it through the rest of the year. Waiting to do this can prove costly.

2. Analyze cash flow

Distributors must prepare for the possibility of some problematic months ahead. Having positive cash flow will be crucial. Contact suppliers to ask about renegotiating the terms of your agreements and push to delay payments on supplies or equipment to adjust for cash flow if needed. Contact landlords as well to inquire about their flexibility.

Do this now. It is easier to make judicious plans with calmer heads than to scramble to come up with a plan or negotiate during a financial emergency.

On the other side of the spectrum, tighten accounts receivables. If you have not already, offer clients discounts if invoices are paid within 10 days, and enforce interest charges if invoices are not paid within 30 days.

3. Plan for the what-ifs

As the economy begins to bounce back, we may be looking at an entirely different business landscape and marketplace. You need to anticipate what-ifs and make a plan to deal with them. Consider the following what-if potentialities:

Your company may need more staff. Will you be able to hire back former workers, or will you need to hire and train new workers to fill new positions?
One or more of your current suppliers may not make it through the downturn. Do you have alternative suppliers you can go to?
A competitor could go under or decide to liquidate. How can you take advantage of this situation? Are you in a position to purchase its current inventory? Are you able to take on its clients? Will you have the funds or a bank line of credit available to help you do so?
Customers might begin calling for specific products and ask that they be delivered as quickly as possible. What will you do if your suppliers do not have these available or there are delays?
Your suppliers may experience delays in international shipping. Do you have domestic suppliers waiting in the wings?
There could be a sudden weakening of demand for specific products or a category of products. Can orders for those products be canceled? If they have already been delivered, can those products be returned to help protect cash flow?
One of your largest customers could unexpectedly go into bankruptcy. Do you have a diversified customer base or enough savings to carry you until you can recruit new clients.

4. Make a strategic plan

When times are good, many distributors find they are so busy keeping up with product demand that they do not have time to take a close look at how their businesses are operating. As you prepare for business to recover or resume, use this time to look at how different departments within your company are operating. Does each department have the appropriate number of staff members?

Will your sales team need to make changes in the way it works with clients? For example, should you incorporate an online dashboard system that would help customers select the most effective products? Expect consultative selling strategies to become increasingly important as the bounce back begins.

Who are your best customers? Consider not only who generates the most revenue but also factors such as time allocation, gross margins and customer payment patterns. For instance, a large customer may purchase the most supplies, but that customer may be receiving undeserved discounts, require more time and attention than other customers, or take too long to pay bills, which increases the cost of doing business with that customer. Typically, distributors find that the 80-20 rule plays a significant role in profits. This means that 80% of your revenue comes from 20% of your customers. It may be time to eliminate those customers that simply are not profitable or worth the time and effort.

Flexibility is the name of the game right now. Distributors must expect the unexpected and realize that anything could happen.

We know the economy will recover eventually. Of course, we hope that it happens sooner rather than later. In the meantime, preparation is key. The stronger your company is moving forward, the higher the gains will be when the bounce back occurs.

Reprinted with permission from ISSA.

If Biden Wins

Fri, 06 Nov 2020 00:00:00 -0600

As I write this, the United States presidential race has not yet been called, but former Vice President Joe Biden is steadily closing in on the 270 electoral votes required to win. So, what would a Biden presidency mean for supply chain? Here’s what the ASCM editorial team has discovered.

International trade: Biden’s policies center on coalitions of nations that collectively trade with each other, blocking China from expanding control over the world economy. During the June debate, Biden said his administration would renegotiate with Pacific nations in order to “bring them together to hold China accountable.”

Keith Belton, founder and principal of Pareto Policy Solutions, told Industry Week that Biden clearly wants to see the World Trade Organization succeed and is “still for the United States leading the world by setting the rules for international trade.”

In the article, author Ryan Secard adds that Biden’s coalition-based trade philosophy will make it easier for small manufacturers to participate because it helps eliminate the “complex web of trade relationships” they have to navigate.

In addition, Biden has expressed support for the United States-Mexico-Canada Agreement (USMCA) and is expected to uphold the deal. USMCA incentivizes companies to build cars and trucks in North America; creates stronger labor laws; keeps tariffs on most agricultural products at zero, giving access to farmers in all three markets; helps tech companies of all sizes to compete more effectively; and allocates $600 million for environmental protections.

Domestic manufacturing: If he becomes president, Biden says he will redirect $400 billion in federal procurement toward goods manufactured in the United States and implement stricter requirements for obtaining the Made in America label. In addition, he wants to offer companies a 10% advanceable tax credit for investments toward setting up manufacturing businesses and creating jobs.

“There’s a stick to the carrot, too,” Secard writes. “Companies that offshore production and then sell products or services back to the United States will have to pay a cumulative 30.8% tax penalty on their profits.”

The tax credit proposal also focuses on modernizing facilities to cultivate leading-edge processes. “Investing in nascent technologies or products of the future is probably a better investment than trying to bring back an industry that left the United States a while ago,” Belton says.

In a year defined by a devastating pandemic, Biden also has laid out several methods to ensure the United States is less dependent on foreign suppliers and, therefore, better prepared for disruption. He aims to do this by shifting critical products to local production and enabling “surge manufacturing” during a future crisis.

“As well as deploying the Defense Production Act to direct American companies to produce greater volumes of critical products, such as N95 respirators and other items of personal protective equipment, Biden will use the 100-day review process to determine the best way forward when it comes to longer-term decision making,” Jamie Bell writes for NS Medical Devices.

Sustainability: During his campaign, Biden was sharply focused on climate change, outlining a $1.7 trillion plan to invest in clean-energy infrastructure over 10 years. A Nov. 4 Biden tweet states: “Today, the Trump Administration officially left the Paris Climate Agreement. And in exactly 77 days, a Biden Administration will rejoin it.”

As the second-largest emitter of global carbon dioxide, the United States is vital to the success of any climate-change mitigation plan. “A permanent American exit from the climate accord would be a huge blow to the international community’s ability to stave off a climate disaster,” Johnathan Shieber writes for Tech Crunch. “A year of wildfires, flooding and other climate-related catastrophes have shown how changing temperatures are already wreaking havoc on communities.”

Come together

It’s been a difficult year. The election is just the latest in a series of stressful, often alarmingly divisive, events in our lives. No matter the result, we all must remember the importance of collaboration, teamwork, and understanding and supporting each other.

Only when we stand united can we successfully align resources to strengthen networks and use supply chains to create a better world. As always, ASCM is here to support you and your organization with industry-leading education and training, partnerships, and content designed to help us all come together and emerge better than we were before.

5 Steps to Enjoyable and Productive S&OP Meetings

Thu, 05 Nov 2020 00:00:00 -0600

Even in the COVID-19 world, meeting culture is going strong. Many companies believe it is important for teams to meet virtually or in person to discuss issues, solve them, agree on plans and define actions. This is a great approach — as long as the job actually gets done and there are results.

It is said that time is money. Nobody wants to waste time in non-value-added conversations or pointless meetings. Many companies are unaware of how ineffective some of their meetings are, and some hold on to an illusion that all meetings add some sort of value to an initiative’s end results. In actuality, sometimes an hour-long formal meeting could have had the same outcome as a 10-minute check-in.

Some professionals are especially time-strapped and spend their days in back-to-back meetings, so the meetings need to be purposeful and effective. In my own supply chain and sales and operations planning (S&OP) journey, I used to have my agenda full of back-to-back and sometimes overlapping meetings. Because of my company’s global presence, I sometimes would have meetings with teammates in Asia during the middle of the night. It was quite painful when any meeting ended up being ineffective — and this happened at least once a day.

Meeting effectiveness contributes tremendously to the success of a mature S&OP process. S&OP meetings typically are the place where relevant information is shared and decisions are made to close gaps in performance. As Lora Cecere, founder of Supply Chain Insights, has pointed out, 60% of the success of S&OP comes from behavior and culture change. Of course, it is important that companies ensure that their S&OP meetings accomplish the desired tasks. But beyond that, companies should strive to ensure that all of their meetings are productive and effective.

In order to evaluate the effectiveness of S&OP meetings, I designed a small survey that I use to rate the S&OP forums in which I participate. I then share my ratings with the meeting coordinators to support continuous improvement. However, this survey and its recommendations really can be applied to many different types of meetings in order to improve give key factors: preparation, attendance, content, timeline focus and behavior.

Meeting factor 1: Preparation

Efficient meeting preparation ensures that all participants can attend the meeting and arrive with the background knowledge they need to help contribute to the meeting and make effective decisions. For starters, meeting invitations should be sent out well in advance — sometimes a few months in advance for some of your busiest stakeholders or for individuals who will need to travel. Then, the meeting’s presentation and other pertinent information should be sent to attendees at least 24 hours in advance so that they have ample time to review the content, prepare any information they would like to contribute or make a list of questions they’d like to ask during the meeting.

Meeting factor 2: Attendance

Ideally, attendance should be mandatory for all stakeholders. However, if someone cannot attend, they should send a representative who can make contributions and decisions on their behalf. Only the most important meetings — such as the executive S&OP meeting in the S&OP process — should be postponed if a key figure cannot attend. All other forums should take place as scheduled. Again, this is why it is important to send out meeting invitations well in advance.

Meeting factor 3: Content

When I evaluate past meeting content, I consider

whether the presentation previously shared with attendees was actually used or if surprise content was used instead
if meeting leaders discussed the progress of previously agreed-upon actions
whether participants worked to solve gaps in performance and adjust deviations from plans
if a decision was actually made or if the decision was properly escalated to the appropriate party.

It is also important that all participants understand their roles in the meeting and their expected contributions to the overall process so that the team ultimately can produce the expected results and add value to the company. Content tends to be an area where many companies fail, particularly by compromising the decision-making process. This eventually affects the flow of relevant information and ultimately could decrease cash flow and return on investment.

Meeting factor 4: Timeline focus

Even when a good meeting structure is in place, failure to address the relevant time horizon can result in misleading information and ultimately affect the results of decisions made during the meeting. Some meetings might need to focus on the short term, such as the next three months, while others need to long farther ahead. To avoid confusion and to keep the focus on pertinent strategies, it can be useful to dedicate separate meetings to different time horizons.

In line with this, the level of detail discussed in the meeting should be in line with the pertinent time horizon. For example, medium-term S&OP meetings should focus on possible investments, production leveling, inventory buildup and the like. By comparison, meetings focused on the short term should make decisions about product mixes or short-term campaigns.

Meeting factor 5: Behavior

Although this factor is not discussed as often, the behaviour of the attendees plays a critical role in the meeting and its outcome. The meeting owner is responsible for creating a forum to assertively discuss the issues and challenges the company is facing and determine how to solve these challenges. The meeting should be a time to express concerns but also share ideas and suggestions for closing gaps.

The meeting leader needs to foster an environment in which attendees feel comfortable participating. They also need to curtail any finger-pointing or other behavior that detracts from meeting effectiveness. If needed, the leader also should enforce attendance, punctuality, commitment and accountability from team members.

If you are a meeting leader, it’s important that you consider these five factors in order to plan and host an effective meeting. As a meeting attendee, consider evaluating every meeting you attend based on these points and offer constructive feedback to meeting organizers. Attention to these factors ultimately will transform your company’s meeting culture so that each meeting is productive and worthwhile.

Inventory is bad …

Wed, 04 Nov 2020 00:00:00 -0600

… or so we’ve been told.

As supply chain professionals many of us have worked every lean and agility concept to reduce inventory. We’ve lowered our quantities and cut lead times. We’ve held our vendors and manufacturing facilities accountable for producing exactly what we needed, when and where we needed it. We’ve tuned and retuned our safety stock math. We’ve implemented multiple systems and endured countless hours of process training to help lower our stocks. We’ve worked diligently to achieve a batch size of one because inventory is the great evil.

To prove our dedication to the cause, we also developed countless metrics centered on inventory. Inventory was measured relative to sales, margin and forecast. All manner of stratification approaches were used to segment inventory. And inventory reporting was given a place of honor at our sales and operations planning meetings.

Industry professionals take great pride in our ability to reduce inventory. Look at any supply chain resume, and you’re almost certain to find a bullet point about inventory-reduction efforts. I’m as guilty as anyone. Heck, as a consultant I helped people reduce their inventory. I taught best practices and process models and the metrics that mattered. My resume is chockablock with inventory-reduction efforts.

Then COVID-19 hit us like a freight train. Suddenly, it seemed as if, well, perhaps we need more inventory than any of us ever could have imagined.

Cupboards were bare, and choices at the shelf became a rarity, as manufacturers limited variety to maximize capacity utilization. They produced what was most needed by their consumers and leaned into their A stock-keeping units. But even this effort to reduce complexity and optimize manufacturing did not yield enough inventory.

It wasn’t just our thinking on inventory that was broken. Those of us working in supply chain over the last few decades have prayed at the altar of every efficiency model, all leveraged to maximize capacity. Whether we became overall equipment effectiveness zealots or implemented single-minute exchange of die or finite scheduling applications, we sought to maximize every minute of production line capacity. Here, too, we boasted of our own successes in improving capacity utilization. This enabled us to stave off expansion projects, reduce overhead and preserve capital at all costs. But at what cost?

In many industries, hardly a minute of slack capacity was to be found. No doubt, these efficiency efforts served us well. Cash was freed up and capital expenditures were postponed to the last possible moment. We were heroes — until no one could find paper towels. Many industries became unable to meet the needs of surge volumes due to panic buying and pantry loading. By being so darn efficient, we made ourselves operationally inflexible.

Time within the confines of our supply chains was seen as waste. So, we pressured our vendors to reduce lead times, then built more efficient plans around these reductions. We worked on internal agility, making flow and cycle time improvements, all to squeeze more and more time out of our processes and supply chains. This also helped free up cash, mostly by reducing raw, pack and work-in-process inventories. It worked: Our cycle times receded.

When we made such changes, though, we did not expect that a pandemic would gum up the global transportation network — at times, slowing it to a crawl. Nor did we think labor shortages would slow production or distribution operations. Our lead times became meaningless as we scrambled and tracked every delivery and shipment. At a time when we had the greatest urgency, we waited on our supply lines.

Over the past few decades, cost became a key motivator for many supply chain decisions. Believing the world was flat, we sourced globally. We shaved a half penny per piece by moving production somewhere across a pond or onto another continent. But in so doing, we made ourselves less flexible, added risk and increased back time.

All of our “improvement” efforts were done with the best of intentions, certainly; but collectively we built longer and riskier supply chains that were largely unresponsive. And, in most cases, the risk we built in was multiplicative. One improvement effort alone did not lead to a dramatic increase in risk, but in concert, multiple efforts led to some obvious executional failures in the face of COVID-19. Our suppliers and their suppliers and their suppliers followed this path. And, in the end, as the title character famously said in the old Pogo comic strip “We have met the enemy, and he is us.”

I recently read some research that said the companies that fared well during COVID-19 were those that were “sensing and responsive” — and not just in March 2020. While this research did not indicate how these companies reacted, I suspect they pulled in excess raw and pack inventory from their suppliers, expedited shipments, checked and double-checked supply lines, increased future orders, and ramped up their own production to fill their warehouses and distribution points with inventory.

The company I work for took many of these same steps, while very wisely attending to the safety of our staff. We did not obsess over the pandemic, but we certainly looked at the limited number of raw and pack items we sourced through China. We also built finished goods inventory, unsure of the impact the pandemic would have on our plants or distribution network. In the blink of an eye, inventory became our friend. We survived COVID-19, even excelled, by making a few strategic pivots. This is not to say there weren’t tough weeks with lower-than-expected fill levels and a ton of hand-holding to manage inbound receipts and production. But we were far less impacted than many of our peers.

In all this, there are lessons to be learned. As we collectively evolve into the post-COVID reality (whenever that may be), we need to take the optimization models being sold as best practices and reconsider better ones. These tools must embed risk assessment of any process or structural model change. It’s time to stop evaluating best practices in isolated, pristine, laboratory scenarios. And we have got to stop paying so much attention to industry experts, many of who have not so much as planned a widget in decades. Most of their advice is disconnected from our reality. Practitioners must share more with each other.

In the end, COVID has been a lesson in humility for most supply chains. Our industry needs a rethink, one with a much greater focus on risk. Let’s up our game. Test our supply chains in war rooms that challenge our thinking and assumptions about how to react in extreme, event-driven situations. Accept that black swans are more common than we’d like to admit. Estimate and simulate how consumers might react in response to the next unforeseen, unimaginable major disruptive event. The first step is developing a better grasp of our supply partners and the risks that those relationships impart. Then, create smarter inventory buffers (whether finished or raw and pack) so our business models may continue functioning, even amid substantial supply disruptions.

Inventory isn’t bad; it’s essential.

Stronger Futures in Supply Chain

Fri, 30 Oct 2020 00:00:00 -0500

It’s been nearly eight months since the World Health Organization declared COVID-19 a pandemic. In that time, millions have endured national lockdowns, with many making an abrupt pivot to remote work. In fact, about 40% of the U.S. labor force is able to work from home — which begs the question: What about the other 60%?

“The pandemic is starkly reframing societal inequalities between those who have good bandwidth connectivity and those who don’t,” Chinmay Tumbe, professor of economics at the Indian Institute of Management, tells BBC. “The latter are either struggling or out of work, stalling mortgage payments, climbing down the nutrition ladder and dipping into their savings.”

According to the International Monetary Fund (IMF), 495 million full-time jobs vanished in the second quarter of 2020. The IMF expects the trend to continue, with an estimated 245 million lost in the fourth quarter.

“Gone in the blink of an eye, many of these work hours will take months or years to come back,” Luca Ventura writes for Global Finance magazine. “Others might not even exist anymore once the pandemic is behind us.”

A large percentage of the unemployed had previously worked in hard-hit industries, such as tourism and hospitality, food service, cleaning and maintenance, transportation, and personal care — all trades that rely on a steady flow of travel and commuter traffic. Now, a survey by LiveCareer reveals that more than half of those recently unemployed are either unable to identify transferable skills or don’t know how to communicate them on a resume.

ASCM is here for you

Some people are successfully making the shift to new careers in sectors that have thrived during the pandemic. Unsurprisingly, many of their stories involve becoming part of the global supply chain. In fact, Monster reports that there are currently 40,000 vacancies in the industry. Over half of them are for entry-level positions, which further highlights the need for companies to attract new workers from outside the industry.

If you’re currently unemployed and interested in learning more about a future in supply chain, ASCM is offering a limited-time opportunity for members and nonmembers alike. Choose between a CORE membership for free or a PLUS membership for just $60. Both give you access to essential resources including career guidance, a resume builder, interviewing advice, mentorship opportunities and a three-part series on pandemic-era job search strategies hosted by the ASCM Career Coach.

ASCM membership also includes a wide array of professional development programs — in particular, APICS certifications and a body of knowledge that has been the global standard in supply chain learning and development for more than 60 years.

Finally, ASCM members can register for the upcoming ASCM Virtual Career Fair. This event is specifically designed for both industry professionals and those looking to break into the field. You’ll have the opportunity to chat with representatives from top companies, including AT&T Communications, BASF, Chemonics, Collins Aerospace, Johnson Controls International and many more. Register today to begin your career transformation.

12 Tips for Acing a Digital Interview

Thu, 29 Oct 2020 00:00:00 -0500

As more companies shift from in-person to video interviews, good technical preparation has become essential to a smooth, positive experience. Here’s how to plan accordingly, so you can focus on just being yourself and wowing your interviewer.

1. Find an appropriate background. Choose a background that is simple and free of clutter and distractions. Do not use a picture as a background. This is unprofessional and distorts the quality of the feed. Remember: You want the hiring manager to be focused on you, not what’s going on behind you.

2. Test your internet speed. A good internet connection is critical for a successful video interview. If your video is pixelated, invest in boosting your bandwidth, even if it’s just temporary while you conduct a job search. Google offers a free internet speed test (search “internet speed test”) that can determine if you need to make any bandwidth upgrades.

3. Charge your computer battery. This seems obvious, but make sure your computer battery is full. Better yet, plug in your computer. The last thing you want is for it to die in the middle of the interview.

4. Adjust your lighting. Face a window or have one steady, soft lamp directly in front of your face for even lighting. Avoid sidelight and backlight, as the camera will expose in response to the light and turn you into a silhouette. A good rule of thumb is that your face needs to be the most lit up object on the screen. Consider an affordable clip-on light that attaches to your laptop or monitor.

5. Sit the right distance away from the camera. Even though this is a video interview, you still want to give the interviewer some personal space. Take a seat about two feet away from your camera. There should be a few inches between the top of your head and the top of the screen. Ensure that the camera is at eye level.

6. Run a practice test. Practice is the key to a successful interview, regardless of the format, but it’s even more important with video. Invite a friend or family member to a video call, and go over this simple checklist:

Joining the call —make sure you know how the software works so you are not late to your interview.
Video — check lighting and get rid of any glares.
Audio — confirm that you are not echoing or sound too loud or soft.
Network — verify that your internet and computer battery are capable of conducting an hour-long video call.

7. Dress to impress. Just because you’re not interviewing in person doesn’t mean the interviewer won’t be forming the same type of first impression. It’s perfectly appropriate to ask about proper attire prior to the interview. When in doubt, go with business attire — better safe than sorry.

8. Arrive early. There often is a waiting room within video calls. Join the call five minutes early so you’re ready when the interviewer launches the broadcast.

9. Communicate nonverbally. A downside of video interviewing is that the natural communication that comes from eye contact and body language can be diminished. Nodding your head and showing facial expressions let the interviewer know you are invested in what they have to say. Try to look directly into the camera, rather than what’s on your screen. It’s challenging at first, but it gets easier with practice.

10. Let the interviewer completely stop talking before your respond. If you jump in too soon, it mutes the mic of your interviewer and cuts them off. This can come across as rude — and awkward, if you miss out on what was said and need to ask them to repeat it. Allow a pause that’s slightly more extended than in real life.

11. Use video to your advantage. The interviewer cannot see what is behind your camera, so leverage this opportunity to tape up your notes, the questions you plan to ask, a list of accomplishments and other pertinent information. Have the job description visible, as well as background information on the company.

12. End on a high note. Always let the interviewer end the meeting. And prior to its conclusion, be sure you’ve conveyed your interest, inquired about next steps and thanked them for their time.

Register for the ASCM Virtual Career Fair on November 12 from 9 a.m. – 12 p.m. CST.

The XYZs of Inventory Management

Wed, 28 Oct 2020 00:00:00 -0500

As the APICS Dictionary can attest, there’s a whole alphabet of strategies to guide supply chain operations. At the start of the alphabet, ABC classification guides inventory management. The relatively simple yet effective concept splits a collection of items into three groups — A, B and C — based on item and dollar volume. The A group usually represents the top 10-20% of the items based on sales popularity, which tend to make up 50-70% of the collection’s sales volume. The B group contains the next 20% of items by popularity and dollar sales volume. The C group contains the remaining 60-70% of the items, which account for 10-30% of dollar sales. Items in the A group tend to be given more attention. For example, they may be counted more often to help avoid stockouts. Items in the C group tend to be governed by looser controls.

Although ABC classification or analysis has been associated with always better control, the method does have its limitations. For example, classifying items based on one or two factors could be too simplistic. In a dynamic marketplace, product sales can be erratic, which can cause items to switch groups quickly and frequently. If supply chain managers don’t stay on top of these frequent changes, their ABC classification could quickly become obsolete. Plus, these changes can have trickle-down effects on production, safety stock, service-level agreements, sales and marketing plans, and more.

ABC analysis can be improved by pairing it with XYZ analysis, a framework that classifies products based on their amount of demand variation. Like ABC analysis, XYZ analysis classifies products into three groups based on their level of demand predictability and how much they deviate from their forecasts:

X items are ordered frequently, perhaps daily. With frequent replenishment, they should have low demand variation that is predictable.
Y items are ordered less frequently, such as every few weeks or less. There is more variation in the demand amount.
Z items orders are infrequent and irregular. They have the most demand variation and are the most difficult to predict.

The 9-box approach from the Association of International Certified Professional Accountants (AICPA) pictured below illustrates the ABC-XYZ relationship.

Figure 1: The 9-box approach to the ABC-XYZ relationshipSource: AICPA, cgma.org

A company should never be out of stock on Class AX items. By comparison, class AZ items likely would not be inventoried because they could result from a large one-time purchase. Class CZ items are inventory liabilities.

A blended effort

With the combination of ABC analysis to consider item value and XYZ analysis to factor in demand variation, inventory managers can then collaborate with other key functional managers in production, accounting, information technology, logistics and procurement. The departments should all work together to both establish inventory management policies and develop systems and processes to implement these policies. AICPA suggests that these inventory policies could include

degree of automation and timing of replenishment processes
mutually agreed upon inventory parameters for ABC items, including buffer stocks
inventory control rules, such as cycle counting frequencies.

Figure 2: ABC-XYZ policies

Source: AICPA, cgma.org

With this foundation, the combination of ABC analysis and XYZ analysis delivers three key benefits:

It provides a scientific and transparent framework to develop and refine inventory management policies.
It optimizes trade-offs among the costs, risks and benefits of holding stock.
It breaks down silos within an organization. Key stakeholders’ needs are known and can be factored into the inventory policy.

In addition, it better tailors inventory systems and procedures to corporate objectives or the APICS Supply Chain Operations Reference Digital Standard.

Beyond the basics

This partnership between ABC classification and XYZ analysis is only the tip of the iceberg. There still are many other inventory management challenges that need to be addressed in day-to-day operations:

What’s the best way to classify and manage a fast-moving, high-value item that is mainly purchased by one customer without a purchase agreement? What happens if that customer no longer needs that item?
Is it accurate to classify a high-value item that is only sold once a year but in a large amount as a class A item?
How can a global company manage items that are class A items in one country but not even on the radar in another country?
What’s the best way to classify and manage a new product? Some managers choose to assign an L classification to these items at launch and manage them with special product-launch criteria through the initial sales cycle. Others might use the B classification as the middle ground of ABC classification.

In tackling these challenges, some companies might find that ABC classification and XYZ analysis are enough to create a working inventory management system. For more complex cases, other strategies might need to be considered or interwoven into the system. Perhaps the answers lie somewhere among the remaining 20 letters of the alphabet.

ASCM and ASM Partner to Conquer Constraints

Fri, 23 Oct 2020 00:00:00 -0500

I’m proud to tell you that ASCM has partnered with the American Society of Microbiologists (ASM) to develop a data-collection platform that streamlines the path between people in need and COVID-19 tests — and, eventually, vaccines. The tool provides a near-real-time visualization into the capacity, use and resources necessary to meet consumer and patient demand for testing.

Unfortunately, the platform has made it clear that we still have a lot of work to do. To date, 117 U.S. clinical laboratories have reported running at an average of only 41% of testing capacity. And even with recent ramp-ups, these scarcities continue to cause bottlenecks in nearly every aspect of test production: chemical reagents, swabs, sterile containers and more.

Meanwhile, a ripple effect is upsetting the production of tests for more common illnesses, such as strep throat, pneumonia and bronchitis. In fact, 65% of labs have a shortage of non-COVID-19 testing supplies.

“With their current supplies on-hand, the labs reported that they would be able to continue carrying out routine testing for bacterial diseases for an average of nearly nine days,” Connor Hale writes in Fierce Biotech. “Mycobacterial tests — such as for tuberculosis — were found to be scarcer, with an average of six days remaining.”

Essential global collaboration

According to our ongoing efforts with ASM, a lab can presently administer an average of 1,162 COVID-19 tests each week. However, if there were no constraints on resources, that number could be more than double.

According to the APICS Dictionary, a constraint is any element or factor that prevents a system from achieving a higher level of performance with respect to its goal. In other words, constraints obstruct the path to essential objectives.

As our work with ASM has made clear, collaboration is a proven way to remove constraints. To that end, ASCM partners with a network of world-class organizations in order to create supply chains that give customers and patients what they need:

With The Bill & Melinda Gates Foundation, we’re gathering resources and expertise in order to help all people lead healthy, productive lives. Through their generous grant, we’re implementing a sustainable operating model to improve public health supply chains and foster the advancement of end-to-end supply chain management in Africa.
Our partnership with the Chartered Institute of Procurement and Supply is making it possible to significantly improve workforce development, organizational standards and benchmarking within the procurement field.
In collaboration with Deloitte, ASCM produces the annual ASCM Case Competition, designed to engage and inspire the supply chain leaders of tomorrow. In addition, we’ve created the Digital Capabilities Model for supply networks. Compatible with SCOR, this model helps organizations understand the complexity of digital supply networks and assess their company’s process maturity.
With global management consulting firm Accenture, ASCM is working to provide an extensive, easy-to-access online study program that supports the APICS Certified in Production and Inventory Management review process.
And our partnership with PwC led to the development of SCORMark supply chain benchmarking services for ASCM members. PwC also lends its expertise and point of view as part of the ASCM Digital SCOR Taskforce.

Our collective response to the constraints associated with this pandemic will only be successful if there’s global alignment. Again, we have a lot of work to do. Let’s continue collaborating to overcome constraints and create networks that make an impact across the globe.

Inspiring Purposeful Global Engagement

Thu, 22 Oct 2020 00:00:00 -0500

Editor’s note: Deirdre White is an internationally recognized leader in building trisector partnerships to address the world’s most pressing challenges. As CEO of PYXERA Global, she has led the transformation of the organization to one that maximizes impact through strategic partnerships. PYXERA Global’s mission is to reinvent how public, private and social interests engage to solve challenges. The organization does this by leveraging the unique strengths of corporations, governments, social sector organizations, educational institutions and individuals to enable people and communities to solve complex problems and attain mutually beneficial goals.

SCM Now Editor-in-Chief Elizabeth Rennie recently had the opportunity to interview White. Here, they discuss PYXERA’s trisector partnership model, strategies for getting engagement from executives and boards of directors, the role of supply chain management professionals in creating ethical businesses, and much more.

Rennie: PYXERA Global creates programs that address some of the world’s most pressing challenges. Can you please expand on what challenges you work to address and the key stakeholders involved?

White: Our mission is to reinvent how the public, private and social sectors engage to solve complex challenges. We’ve worked with partners on issues such as the skills gap in education, food security, ocean plastics, building ethical supply chains, and helping business transform to create a more equitable and sustainable future.

Rennie: How does PYXERA Global’s trisector partnership model enable this?

White: We’ve found over the last 30 years, working in more than 90 countries, that trisector partnership is critical to sustainable and scalable social impact. The most pressing problems that the world faces today — COVID-19, structural racism, climate change — are all deeply rooted in systemic challenges that have no respect for borders or sectors. We help leaders connect with one another and innovate for lasting systemic change.

Rennie: The concept of ethical business practices is something that more and more individuals are feeling passionately about these days. However, success really hinges on getting CEOs and boards of directors to make this a priority. What advice would you give our readers about how they can influence their own company leaders in this regard?

White: If we don’t reimagine business with sustainability in mind, we are missing opportunities. My advice to your readers is to have sustainability in mind and commit to maximizing benefits for both business and society. More than ever, employees, customers and communities expect business to act with authenticity and transparency — and to provide a demonstrable positive return for society.

Rennie: PYXERA Global has an ongoing initiative related to the circular economy. Why is adopting a circular model so important for today’s supply chains?

White: In our natural world, all physical matter revolves in an infinite cycle of restoration and regeneration. There is no waste in biological systems; only secondary resources. It therefore makes sense that our global economy should be harmonious with its larger ecological system. But this is not the case. Our linear, take-make-waste platform requires a paradigm shift. The transition to alignment, to a circular economy, must happen now. It’s about how we think, behave and consume. It’s about equitable distribution of resources to avoid straining critical ecosystems and careful attention to the regenerative capacity of nature.

Rennie: What specific strategies do you suggest?

White: We don’t need to find the right answers all at once. But it’s important to ask the right questions: How can we stop extracting raw materials and design out waste? How can we keep materials already in the economy in circulation to avoid consumption at the expense of our natural resources? And how do we get to a state where our economic activity regenerates our natural systems?

Despite the monumental challenges we face, there are awe-inspiring opportunities to correct course, and we should be energized by the prospect. Entrepreneurship is entering its golden age. Technological breakthroughs are hitting their stride at the right time to give humanity the boost it needs. The groundswell of support from consumers, employees and investors who are demanding change promises to disrupt industry and create circular supply chains. Growing public awareness and activism also promise that we’ll elect public leaders who are serious in their commitments to a more sustainable future and willing to make necessary decisions for the sake of future generations.

Rennie: Values-based leadership is critical to efforts like the ones we’re talking about today. Interestingly, we’re seeing considerably more news stories these days about CEOs being fired for ethical reasons rather than financial ones, so it seems that the business community is beginning to shift its focus toward integrity, fairness, and environmental and social responsibility. What are some practical techniques that you used to empower the leaders you work with to voice values and make decisions through a moral lens?

White: We have seen signs that society wants more from CEOs. We have seen this with calls for action around our environment; gun control; and, most recently, structural racism. The expectation now is that we listen to those who are affected by our decisions — and that is a good thing. We encourage leaders to live out their values because that is the only way we can truly communicate and be vulnerable enough with one another to learn from each other and build more effective, diverse and inclusive organizations.

Rennie: I read an article where you said, “Things are much more interconnected than we like to think.” Why do people fail to spot the importance of, and potential within, the interconnected nature of our global networks?

White: We often, sometimes unconsciously, narrowly view a problem through the lens of how it affects us and our own organizations. Therefore, we create solutions that are incomplete and fail to involve the relevant stakeholders and parties that it takes to make real change. The truth is that the problems we face don’t adhere to borders, so our solutions can’t either. This is why cross-sector engagement in so important.

Rennie: As the global supply chain community continues to emerge from the COVID-19 pandemic, what should companies be doing to ensure recovery efforts keep sustainability, responsibility and ecological stewardship at the forefront of our efforts?

White: We are all reimagining what shape the future will take in the wake of the COVID-19 pandemic. PYXERA Global’s focus is to help our partners reimagine their core businesses, operations and social impact objectives in order to sustain the critical work their organizations have done with communities. Last year, many of the largest corporations in the world made commitments to lead for all stakeholders. Now is the time, in the wake of this crisis, to make good on those promises and continue to engage with our employees, our customers and our communities with sustainability and the greater good of society in mind.

Rennie: How can supply chain professionals help their organizations cultivate a worldview in order to have a more positive impact?

White: Our worldview is formed by the prevailing cultural influences we experience every day. It is critical for leaders at all levels of an organization to cultivate a corporate environment that embraces change and innovation with sustainability in mind. Supply chain professionals have the unique opportunity to increase competitiveness and customer satisfaction by directly applying sustainable practices to their work, and society is eager to see more ethical supply chains as a means to lasting change.

Rennie: Taking that a step further, how can supply chain professionals make sure to hold themselves and their organizations accountable for ethical, sustainable business choices?

White: Supply chain professionals are in a unique position to set new world-changing standards and, as you said, to hold themselves and others accountable for that vision. Don't miss this unparalleled moment in history when institutional investors, corporate leaders, customers and employees are in unprecedented alignment — and when the world so desperately needs leadership on sustainability. You can put action behind all the grand statements and big promises we have heard to make lasting change across industries and around the world.

Tiny Sources of Inspiration

Wed, 21 Oct 2020 00:00:00 -0500

Over the past few months, many of us have taken on “COVID projects” to maintain a sense of purpose and make staying at home a little more enjoyable. Vegetable gardens are popping up everywhere, causing seeds to be in short supply. For a while, you couldn’t find yeast or flour because so many people were baking bread. Aluminum cans have been scarce, as more of us are becoming amateur mixologists and using seltzer and tonic for homemade cocktails. And as I write this, we’re experiencing a lumber shortage because of all the DIY remodeling homeowners are tackling, not to mention record-low interest rates leading to high demand for more new homes.

As for me, I’ve been creating a backyard bird oasis. It stars a bird bath that’s always in demand, hardy flowering perennials chosen to attract pollinators and multiple hummingbird feeders. Though any guest is welcome, the hummingbirds are easily my favorite. Watching them outside my office window as they gently hover over a feeder, dip their long tongues into the nectar I made for them and then dart away is completely mesmerizing. (I’m sure my ASCM team members are wondering why I seem a bit zoned out during video calls.)

I’ve read up on hummingbirds and discovered a few fun facts. For instance, their wings flap about 80 times per second, their eggs are smaller than jellybeans, and they can’t smell. That last one surprised me, as they have no problem finding the flowers I’ve planted. Turns out, their excellent vision gives them a keen eye for bright colors. Perhaps most impressively, they’re the only birds that can fly backwards.

At the risk of sounding any more bird-obsessed than I already do, I thought I’d share some insights I’ve gained from these remarkable creatures:

Work smart. When I put up my first feeder, I worried that it would take the hummingbirds a long time to find it — or that they might find it, but then forget where it is. How wrong I was. Apparently, hummingbirds remember every single flower or feeder they visit. No time is lost hunting for nectar; they already have a plan. Efficiently accessing that sugar is critical because of how much energy they expend in flight.

Improvise. Hummingbirds are no heavier than two playing cards, and this minuscule size equals flexibility, dexterity and speed. In addition to flying backwards, they can go sideways or completely upside down! This allows them to easily access nectar from flowers in awkward places and from any direction. As any of us living through this pandemic can attest, we can’t always depend on our best laid plans. Imagine if we were all so agile with the different situations we encounter in life, as well as the pathways toward our goals.

Relish solitude. Hummingbirds are not particularly social. They prefer to fight over territory than embrace the company of other birds. While most of us are probably ready to reconnect with our social circles at this point, there’s something to appreciate about looking inward and listening to our own needs.

Rejuvenate. Hummingbirds are constantly moving, so they take sleep seriously, entering a state akin to hibernation. I’m a big fan of hard work — and I think most people agree that work has been particularly grueling recently. But this is why we must take the time to relax and refresh.

Make a lasting impact. Hummingbirds carry pollen from plant to plant, laying the groundwork for next year’s blossoms. It’s easy to feel isolated these days, but we do have a collective purpose: to keep each other healthy, to watch out for our neighbors and to rebuild a better world for the next generation.

Putting Your Trust in Blockchain

Fri, 16 Oct 2020 00:00:00 -0500

“Trust is fragile in a digital world,” write the authors of a new PwC study, Time for trust: The trillion-dollar reasons to rethink blockchain. They note that more than half of CEOs surveyed believe faltering trust is a threat to their organization. Increasingly, companies are wary of cybercrime, fraud, data loss or misuse, and other risks associated with the internet, digital devices and related technologies. The PwC research reveals that blockchain is emerging as a frontrunner to help these organizations build greater trust in their commercial transactions, data security and sharing, certification, and much more.

Blockchain applications are showing up in all sorts of places these days. In the government sector, Followmyvote has been getting a lot of press recently. It’s an initiative to build a secure, mobile voting platform for greater election transparency, lower costs, and higher turnouts. According to the website, through blockchain, Followmyvote will offer citizens a way to mathematically prove election results are accurate, without compromising voter privacy.

In retail, blockchain is giving some customer loyalty programs an overhaul. Loyyal is a framework based on blockchain for the creation of incentives, such as points and miles. It offers brands an innovative way to unlock value, expand marketing capabilities, and personalize offers and promotions with near real-time insights into member behaviors and interests.

Blockchain is also revolutionizing health care, with experts saying total spend on integrating blockchain into the industry will rise to $5.61 billion by 2025. The technology offers significant advancements in storage, management, and access to patience records and medicine-related data. In addition, it’s being used for medicine temperature control and shipments track-and-trace. “Blockchain’s ability to offer transparency around life-changing treatments can build confidence and propel the industry forward,” says PwC’s Anthony Bruce, partner and pharmaceutical and life sciences leader.

Last, but certainly not least, blockchain is saving financial institutions as much as $12 billion annually. Acting as a ledger, blockchain can securely and efficiently record and store financial transactions, enhancing transparency and allowing for digital identity verification. “The question of whether blockchain can disrupt our traditional financial system is no longer the one you should be asking,” Christo Petrov states in TechJury. “Now it’s a matter of when it will take full control.”

Opportunity open to all

“Serious activity around blockchain is cutting through every industry across the globe right now,” says PwC’s Steve Davies, partner and blockchain leader. “It’s driven by an acute need to win trust in the digital world. Businesses are rethinking their operations and are discovering not only is blockchain technology key to delivering trust, but it’s an opportunity open to all.”

If you’re wondering how your supply chain organization can maximize that opportunity, don’t miss “Blockchain in Supply Chain,” part of the five-part, virtual learning series, ASCM CONNECT+. Moderated by ASCM’s Editor-in-Chief Elizabeth Rennie, the panel will explore blockchain technology, its benefits and limitations, real-world applications, and much more. The series kicks off November 18, with more sessions every other month. Register today, and enjoy 20 hours of leading-edge supply chain insights.

New Tech to Protect Your Employees and Customers

Wed, 14 Oct 2020 00:00:00 -0500

In early March of 2020, when businesses around the world were realizing the effects of the coronavirus outbreak would be much more widespread than initially anticipated, organizational leaders began to see the writing on the wall. To comply with social distancing measures, they would need to vastly change their business operations to avoid shutting down temporarily — or risk closing completely. Otherwise, industries would face a crisis amidst their workers, similar to what was later experienced by meat-packing plants across the United States in April and May, when the pandemic reached its peak.

In the report “Reopening workplaces: A collection of workforce-protection interventions,” research organization McKinsey & Company outlines where businesses have responded to the crisis across the “workforce journey”: pre-entry, travel to work, at work, common spaces and post-infection. With so many touchpoints for employees to be exposed to the virus and to others within the organization, it’s no wonder businesses across industries reacted quickly. They rushed to rearrange their workrooms to put more space between employees; encouraged those who were able to do their jobs remotely to stay home; required personal protective equipment, such as masks; implemented stringent cleaning and sanitization procedures; and limited contact between business groups to ensure safety for their employees, prevent the potential spread of the virus to customers, and keep the business running despite extreme circumstances.

Invisible Health Technologies (IHT) has sold thermal screening technology around the world since the 2003 SARS epidemic. Andrew Southern, IHT’s founder and CEO, said, “When COVID-19 shut down the U.S., I turned my attention to helping businesses use technology to help keep their employees and customers safe and confident moving forward.” IHT is an authorized reseller of Omnisense Systems’ Sentry MK4 Mass Fever Screening System, which assesses temperatures in a public setting. “The camera senses the heat coming off our skin and uses a proprietary algorithm to estimate our core body temperatures,” Southern says. “The system operator sets a temperature threshold, and the system will alert if someone walks by the camera who is estimated to be above the temperature.”

The thermal screening system is already in use in airports, hospitals and Fortune 500 companies across the U.S., and Southern says, “We see tremendous interest from factories, processing plants, distribution centers, attractions, education and transportation sectors.” They’re also seeing an uptick in adoption for other health technologies they sell, such as air filtration and UV-C light systems.

Concentra, a health care company, offers its clients antibody testing to check employees for immunity, “COVID-19 RNA testing to detect the virus in asymptomatic individuals,” as well as ongoing COVID-19 testing until the individual is deemed virus-free and able to return to work. Telemedicine, such as the kind offered by Philips or VSee, is being used to synchronously connect employees and healthcare providers and screen workers on their way into work. That technology isn’t especially new, but the pandemic has hastened its adoption.

Other companies are implementing more holistic measures, tracking employee wellness from the first sign of potential exposure to referral to a doctor through a health-related leave of absence. Axiom Medical, an occupational health services company for employers, recently released the new app Checkin2Work to help customers manage their employees during the pandemic. With it, employees confidentially self-report respiratory symptoms and potential exposure to the virus, and their employers, through Axiom’s health portal, track temperatures or antibody testing results. Although the app is customizable and companies can choose which types of screenings to require, optional questions include:

Can you confirm that you are healthy?
Do you have a fever?
Have you traveled to a virus hotspot in the last 14 days?
Have you experienced any new symptoms related to respiratory illness?
Are you living with or exposed to someone with symptoms of COVID-19?

Although employees take their own temperature to report it to the app, many businesses have set up additional screenings at the company entrance point, such as the lobby. Those might include scanning eyes for infrared temperatures screening, COVID-19 testing via nasal swap, or antibody testing.

After completing the questionnaire, the employee is either cleared for work or flagged and told to stay home. At that point, Axiom takes over the case management process, confirming that the symptoms are new and not from an underlying condition (for example, a history of smoking or seasonal allergies). Then, an employee might be connected to one of the medical professionals Axiom has on staff; referred to a health professional via telemedicine; or directed to the emergency room.

Axiom was approached early this spring by businesses, desperate to stay in operation, that acknowledged their need for large-scale help in managing employee health, according to Dara Wheeler, Chief Marketing Officer at Axiom. Axiom has traditionally supported customers in industries most likely to experience workplace injuries, such as manufacturing, distribution, and oil and gas, and those customers reached out for help right away. However, the pandemic also led new industries, some that support critical infrastructure, to contact Axiom, such as food production companies; laboratories developing antibody and COVID-19 testing; residential gas service companies; and more recently, casinos and other businesses in the entertainment industry — newly concerned about occupational health and wellness — to ask for help. “As people started coming back into the workplace, companies wanted to be ahead of the curve.”

Longtime client, BJ Services, an oil field services company in Texas, was an early adopter of new pandemic-specific processes and has successfully remained open during the months of uncertainty. They have been “very innovative in this space,” says Wheeler, and have adopted solutions such as wearable tech, infrared scanners in lobbies, and COVID-19 testing before a shift, which might be a day in a traditional office setting or a week of living on-site in an oil field basin. “They’re even considering using infrared technology in remote oil and gas workplaces,” where they can bring in a van with a camera that screens employees while maintaining a safe distance.

In fact, being “proactive” has given BJ Services additional leeway in collaborating with their partners, Wheeler says. “Their customers are allowing them to bypass traditional processes.” Truckers, for example, can go to the front of the line, instead of waiting at health screening checkpoints. Although public relations isn’t any company’s primary concern during a pandemic, businesses that implement specific health precautions are “showing the public they’re taking this seriously. By taking care of their employees, the public perception of these companies is able to be maintained.” Companies that have implemented Axiom’s services have even impressed local health departments, who have “backed off” workplace concerns because of the methodical systems in place, Wheeler says.

In the long term, businesses have a lot to consider about how they operate in the future. “After the immediate threat of COVID subsides, I think the public understands now that we need better safeguards in place for future health events,” says Southern.

Wheeler agrees. Although Axiom had supported companies through earlier outbreaks, such as H1N1 and SARS, the COVID-19 pandemic was much bigger in scope. According to Wheeler, these organizations had generally considered the risk of a major outbreak before but didn’t have widespread policies and procedures in place for social distancing or affording extended leaves of absence. Businesses are “having to address personal illness in the workplace for the first time… [Going forward] organizations are going to have to take a hard stance about illness in the workplace.” Innovative technologies are one giant step toward keeping everyone safe.

Safeguarding the Global Supply Chain

Fri, 09 Oct 2020 00:00:00 -0500

Back on May 14, Stephen McBride wrote in Forbes: “The coronavirus is laying the groundwork for a massive cyberattack. In fact, I’m on record today saying we’ll see the largest cyberattack in history within the next six months.”

Five months later, it’s clear that McBride was eerily correct. Hackers have been targeting health care institutions, social media networks, hotel chains, public school districts, global maritime regulators and shipping lines, and even the World Health Organization (WHO). In fact, as a result of criminals looking to take advantage of challenges associated with the pandemic, WHO representatives say they’ve seen cyberattacks double since the onset of the COVID-19 crisis.

Of course, cyberattacks have been a problem for decades, but they’re flourishing as technology takes an ever more prominent position in our everyday lives. Other factors include the rise of cryptocurrencies and more advanced hacking techniques.

“The trend has been going up for a while, but in 2020 it has just been skyrocketing,” Dmitri Alperovitch, chairman of nonprofit cybersecurity think tank Silverado Policy Accelerator, told The Wall Street Journal.

October is National Cybersecurity Awareness Month, which aims to raise awareness about the importance of cybersecurity while giving people and businesses the resources they need to be safer and more secure online. With that in mind, Brandon Lickey offered strategies for practicing “good cyber hygiene” in a recent ASCM blog post:

Use a virtual private network (VPN): With so many people now working from home, we simply can’t trust basic Wi-Fi. Organizations should ensure all users access internal systems and online services using a VPN to securely connect to corporate resources over the internet. This will provide a much-needed extra layer of security.
Don’t take the bait: Phishing attacks, specifically on corporate email, have dramatically increased in recent months. Hackers typically use a disguised email as a weapon, so organizations must ensure that employees know what to look for and are cautious about opening attachments or clicking on links from unknown or suspicious senders.
Implement robust authentication: Multifactor authentication is critical for remote work. As history has shown, passwords are one of the most heavily targeted entry points to any organization because users tend to recycle a set of common passwords. Only granting access to corporate resources after successfully providing two or more pieces of evidence makes exploiting those logins much more difficult.
Proceed with caution: Even as the outbreak subsides and workforces return to the office, cyber criminals are likely to be lurking in the shadows. “Cyber criminals are patient and stealthy,” Lickey writes, “often establishing long-form attacks that allow them to fly under the radar for extended periods of time.” The first weeks back in the office will be critical to making sure enterprises can keep operating.

The knowledge you need

ASCM membership connects you to timely and informative articles such as Lickey’s in the ASCM blog and the award-winning SCM Now magazine, a trusted resource for innovative and practical solutions that make an impact on supply chains around the globe. The latest issue of the magazine has just gone live, with articles on cybersecurity threats, geopolitical shifts, resource depletion and much more.

If you’re an ASCM member, I know you’ll value access to these and many more benefits. If you’re not a member, please join us. We must come together in a united, deliberate effort to protect supply chains and those they serve.

Migrate Toward First-Rate Teamwork

Wed, 07 Oct 2020 00:00:00 -0500

We are now in the back half of a year that has seen one of the world’s most challenging and unexpected time periods. Along the way, we have witnessed extraordinary acts — often by people who typically go overlooked. It is more evident than ever before that people make the difference, and working together leads to the best results.

Teamwork is a principle-based value, which is built upon a foundation of trust and a mindset that always puts the team first. Every high-performing team has a common purpose — a mission that sits far above each individual member. Yes, every player has a unique identity, personality and talent set, but these are secondary to the team itself.

To clarify these points, we can all learn a little something about teamwork from geese. As geese flap their wings, they create an uplift for the bird following. By flying in a V formation, the whole flock adds 71% greater flying range than if one bird were to fly alone. When a goose falls out of formation, it feels a sudden drag and resistance and quickly gets back into position. In other words, if we share a common direction and sense of community, traveling upon the momentum of one another, we get to our destination more efficiently.

When the lead goose gets tired, it rotates back into formation, and another takes over point position. Its followers honk from behind, encouraging those up front to maintain their speed. So, depending upon each other, taking turns with difficult tasks and sharing leadership responsibility makes the work easier for all.

When a goose gets sick or wounded, two geese drop out of formation and follow it down to the ground to help and protect it. They stay together until the ailing goose either can fly again or dies. Then, they catch up with the flock or join another. The greatest teams foster “we” over “me” every time and never pit people against one another. Rather, team members complement each other’s areas of strength and weakness, allowing the team to maximize the possibilities.

KEY TAKEAWAYS

With these lessons in mind, there are four additional points to add to your teamwork playbook:

To empower each team member to buy in and take ownership, it is extremely important to share information and provide feedback. Without factual and timely communications, a team can dissolve into weak, dependent groups that end up shifting responsibility to only those who are informed. When this happens, a handful of team members may be individually successful, but the team is unlikely to reach its goals.
To get teams aligned, leaders must understand what motivates each member and be able to accurately assess their skills. This begins with listening and critical observation. Just like the geese, everyone will lead and follow at certain times. Respect other’s opinions and recommendations while cultivating a rational process for decision-making and problem-solving. Always gather facts and data to help define the problem.
Eliminate internal competition. The greatest competitive advantages are those that are hardest to duplicate. Long-lasting commitment is built over time with trust and integrity. Look in the mirror: What kind of role model are you? Are you trustworthy and honest with your team? Do you learn from them — and they from you? Contributions and accountability breed quality and empowerment; everyone becomes responsible for the outcomes and an agent of change.
Teams will fail. Shake it off. As Ralph Waldo Emerson said, “Our greatest glory is not in never failing, but in rising up every time we fail.” Top teams view mistakes as part of the learning process. They believe that, if there aren’t well intentioned mistakes along the way, then they aren’t taking enough risks. Playing it safe never leads to peak performance.

Supply Chains Gear Up for an Unprecedented Holiday Season

Fri, 02 Oct 2020 00:00:00 -0500

These past few months have put supply chains to the test, with shortages, delays and a bullwhip effect like none other wreaking havoc across the globe. As we enter the final quarter of the year, the question on many people’s minds is: Will the holiday season continue to bring extraordinary challenges?

Given current events and the ongoing strain on supply chains, there’s no doubt that the holiday season is going to look very different from the past. “This year will be unlike anything the U.S. market has ever seen,” Chris Walton writes in Forbes, “and unlike anything it will ever see again.”

Consumer shopping patterns in the coming weeks are tough to predict, but in the article, Walton gave it a shot. First, he says Halloween has a number of problems. It’s a single day, leaving parents with no time to settle in and get comfortable with the idea of letting their children go trick-or-treating. And it can’t go virtual. Whether kids going door to door or adults dressing up for bar hopping, that doesn’t translate on Zoom. For retailers, this means significantly fewer costume and candy sales.

Next, with people well accustomed to eating just about every meal at home — plus football going strong (albeit with strange fake crowd noise) — Walton says Thanksgiving is going to be “off the chain.” According to The Wall Street Journal, many grocery stores are already prepping for soaring food sales. Some are stockpiling turkeys and hams; others are building “pandemic pallets” of all kinds of food and paper goods. And Walmart CFO Brett Biggs says the company has even overridden its grocery-ordering algorithms to store up extra inventory.

Black Friday will be all about e-tail. Amazon has already announced its first-ever October Prime Days, with Target following suit and publicizing deals on the exact same days, October 13-14. “In the end, Amazon will do what it always does — take massive share by giving people what they want at great prices,” Walton writes.

James Thomson, of Amazon optimization services provider Buy Box Experts, says the biggest supply chain issue this year will be, unsurprisingly, a lack of last-mile delivery capacity. “With consumers moving so many more shopping dollars online, all of those sites need last-mile delivery through UPS, FedEx, USPS, et cetera,” he notes. “While these carriers are building capacity, they likely will not build anywhere near enough, resulting in late shipments and disappointed customers.”

Finally, although online sales will dominate through December, there are always last-minute shoppers. Retailers must prepare their omnichannel capabilities for an explosion of online purchasing with curbside pickup in the few days right before Christmas. This will be great for easily accessible stores, such as those in strip malls — and another blow to traditional shopping malls. As Walton quips, they’ll be “left hamstrung by safety capacity constraints and digital front-end interfaces that couldn’t coordinate order pickups across a full-range of mall purveyors if Santa Claus himself was in charge of their supply chains.”

What’s next

I’m not so sure about that last point, as Santa’s supply chain has been a remarkable success story for decades. Who else can manage a database of more than 7 billion nice and naughty records? (Talk about big data!) What other company has a zero-emission distribution operation that can traverse the globe in 24 hours? And few companies enjoy such a dedicated and productive workforce. However, counter to the response Virginia O’Hanlon received in the late 1800s, there is no Santa Claus. There are, however, many individuals who play a large part in getting toys, gifts and other products to market.

So, in their honor, I’d like to add one more holiday to the previous list: Happy Manufacturing Day! Held annually on the first Friday in October, Manufacturing Day’s purpose is to highlight the important role manufacturing plays in our daily lives; energize a future pipeline of skilled workers; and fill the millions of high-skill, high-tech supply chain job openings. Here at ASCM, we’re doing our part with the annual Case Competition, in collaboration with Deloitte. The event gives college students real-world experience, lessons in teamwork, opportunities to practice negotiation and much more. ASCM is proud to announce this year’s winning team from the University of Houston, with runners up representing Georgetown and the K.J. Somaiya Institute of Management Studies and Research.

Now, more than ever, supply chain needs inspired and innovative young people. I encourage you to learn more and see how you can get involved with the 2021 event today.

7 Strategies for Networking From Home

Thu, 01 Oct 2020 00:00:00 -0500

Through the COVID-19 crisis, the traditional methods for making connections with other professionals, such as lunch meetings or attending supply chain events, have gone out the window. Digital networking is the new normal — and absolutely paramount, if you are hoping to find a new job.

On the positive side, your odds of reaching those you are contacting has greatly improved, as people tend to be more accessible when working from home. Still, networking remotely does pose some challenges. Following are seven strategies to help you excel at making meaningful connections from the comfort of your home.

Set goals. Before you get started, establish your primary goals. Getting a new job and selling a product or service are common objectives, but think about additional benefits to be gained, as well. These might include identifying a new mentor or mentee, solving a complex supply chain problem, or learning something new.
Leverage LinkedIn. Always personalize your LinkedIn invitations, and send an initial direct message when you invite someone to connect. Keep it short and simple; ideally, five sentences or fewer. Communicate why you are reaching out; your unique value proposition; how you could help the person; and a call to action, such as a question or invitation to speak via phone or video chat. Avoid long messages loaded down with stacks of paragraphs. These rarely lead to further dialogue. LinkedIn is also valuable for messaging. In fact, open rates for notes sent through the platform are significantly higher than emails. After your invitation is accepted, follow it with a direct message, as this can increase your engagement levels.
Video trumps phone. Instead of setting up the typical networking phone call, aim to schedule a video chat. Video is as close as you get to being with someone in person these days, and it can help you establish a more authentic connection. Zoom has become a very popular tool, along with Microsoft Teams. But don’t overlook Google Meet, which is free with a Gmail account and an excellent option.
Enhance your online visibility. Attracting other professionals to you is crucial as well, especially if you are job hunting. The first step is making sure your LinkedIn profile is completed and fully optimized. If you need advice on how to do this, check out my ASCM Career Coach webinar at apics.org/careercoach. Next, consider writing articles on LinkedIn, in a blog or a trade magazine — as well as participating in podcasts and speaking engagements. These are great ways to enhance your visibility and showcase your expertise. Lastly, even if your favorite conferences are postponed or canceled, many events have pivoted to digital formats and, therefore, will need virtual presentations.
Be authentic and empathetic. Under normal circumstances, greeting someone with a simple, “How are you?” is fine. Today, many of us are dealing with additional stresses, ranging from health challenges to being laid off to home-schooling. When reaching out, keep your messages sincere and empathetic. Humanizing your communication in a caring and genuine manner can really make the difference. Think about how you would feel as the recipient of your note, and make adjustments as needed.
“How can I help?” The best networkers know that networking is all about giving and receiving, with the goal of building mutually beneficial relationships. Write down a list of things you can do to help others, and keep it handy as you initiate contact. You can offer to facilitate introductions to people within your personal network, share a thought-provoking blog post or an article that contains helpful advice, or describe a recent innovation in supply chain. Demonstrate the ways you can add value in every message or conversation.
Follow up with patience. Underdoing it and overdoing it are both common networking mistakes. Underdoing it refers to making only one attempt to reach someone and, if there’s no immediate response, assuming there’s no interest. Overdoing it is blowing up someone’s inbox or calling them over and over again. Persistence is very important, but be sure to exercise a high degree of patience, knowing that many people are juggling a lot more now than ever before. Spread your follow-ups over several days, keep them short and sincere, and don’t expect anyone to get back to you right away.

To access more career resources, including a webinar and a video from ASCM's Career Coach, Rodney Apple, visit the ASCM Career Transition page.

5 Supply Chain Chokepoints You Need to Fix

Wed, 30 Sep 2020 00:00:00 -0500

A chokepoint was originally a military term referring to a place where the terrain was tight, forcing large armies to trickle through a few people at a time. Chokepoints are excellent positions for an ambush or for a smaller force to confront a larger one, as proved at the Battle of Thermopylae, which was made famous in the movie “300.”

In business and supply chain management, the term chokepoint refers to any point in a process where a single point of failure can jeopardize the entire supply chain and business. For example, one local meat vendor is not a chokepoint for a restaurant because other vendors exist and are eager to earn the restaurant’s business. If that restaurant were a franchise with a contractual obligation to buy meat only from a specific vendor, that vendor would be a chokepoint because no other options exist.

Chokepoints are vulnerabilities in modern business and should be eliminated whenever possible. However, the complexity of today’s supply chains means that sometimes chokepoints are unavoidable. When that happens, you need to

be aware of where your chokepoints exist
know the ways your chokepoints can fail
establish a fix for each chokepoint.

To help you accomplish this, here are five of the most common supply chain chokepoints businesses have and some suggestions for how to fix them.

Chokepoint 1: International production

Buying your components from a high school buddy who owns a shop two towns over is just as much of a chokepoint as buying them from a manufacturer across the ocean. However, having even just one international supplier could cause hiccups.

Longer production chains, even if they remain domestic, have more links, which can slow down product flow and create problems. When you add international aspects like shipping, regional stability, changing tariffs and taxes, your risk exposure can be serious.

For example, during the recent trade war with China, small businesses suffered losses on reliably profitable items because tariffs from both China and the United States skyrocketed the costs of the merchandise and parts manufactured in China.

The fix

Unfortunately, the best plan here — dealing with domestic or local suppliers whenever possible — isn’t practical for most businesses. The next best option is to source vital materials from two different international vendors in two different countries. This won’t cut out all of your risks, but it does mean you can shift the order load if one region becomes problematic.

Chokepoint 2: Shipping components

Getting the components you need to make your products is vital. You need to get them from the manufacturer to either your customers or your own plant. If something goes wrong, it often means your products won’t get made and sold.

This is especially true of long supply chains in which a single shipment might pass through the custody of a dozen or more responsible people and organizations between the loading dock and your receiving department. For example, the global retooling and widespread absenteeism that came with the COVID-19 pandemic has slowed a large percentage of the non-essential shipping worldwide. As a result, many small and medium-sized businesses haven’t had stock to sell, even if they stayed open to sell it.

The fix

Hedging your bets against this problem takes two steps. Step one is to stay informed of situations that might impact the region, routes and companies involved in moving your supplies. Get early warnings whenever possible so you can make new arrangements in time to avoid a problem.

Step two is to always have a light relationship with a competitor to your usual shipper. Let them know you’re available to be poached if the opportunity arises. When a problem pops up, they’ll be ready to save the day for you to win your business moving forward.

Chokepoint 3: Timing chokepoints

A timing chokepoint happens when event A needs to happen before event B can happen and event A gets delayed. This ultimately delays the timing of the supply chain, causing further delays and missed opportunities.

Sometimes the delay to event A happens because of a chokepoint earlier in the supply chain. Other times, there’s something happening with how event A gets accomplished that causes the slowdown. Either way, that single point of failure cascades downstream.

The fix

The easiest solution to this chokepoint is to widen your timeframe so there’s no risk of choking. Sometimes, this means simply reworking your schedule. Other times, it means establishing a stockpile of components and supplies so a late event isn’t a problem.

Many small and medium-sized businesses can’t do this because they’re waiting on payment for one contract before they can begin work on the next. A small-business line of credit or small-business loan can be a powerful solution here, allowing your timeline to extend beyond the restraints of your cash flow.

Chokepoint 4: Shipping product

This chokepoint is the opposite side of the supply shipping problem. If you ship what you sell, any interruption between your shipping department and the customer creates a poor client experience and reduces your chances for the next sale. Whether the problem is the way you get units to your shipping subcontractor, an issue with delivery or theft in high-crime areas, you’ll still be the one the client blames when things go wrong.

For example, one of my clients shipped a set of branded planners to leads in the United States and Canada, but because Canada had a nationwide mail service strike starting the day after he shipped the items, the Canadian leads didn’t get their planners until after the first of the year.

The fix

Your best defense here is to have a close, customer-oriented relationship with whomever delivers your goods to your customers. If possible, make sure you have an arrangement that helps you know about problems before the client does so you can contact the client with your plan for making things right.

Chokepoint 5: Your staff and system

Your staff forms a chokepoint any time just one person knows how to do something or has the qualifications or permission to make something happen. Whenever that person is ill, on vacation or busy with other duties, your supply chain blocks up. If that person leaves the organization, everything grinds to a halt.

Your systems can create chokepoints when they produce a single point of failure through the timing of a task, the physical layout of a workstation or any number of other factors that go into your business doing what it does. For example, a secure shipping system that requires a manager sign-off before the product leaves the warehouse works great when the manager is available. But if the manager is in a meeting, out for the day or otherwise unreachable, then that product ships out late.

The fix

The solution to this chokepoint is to look at your systems and staffing to identify single points of failure. For each, either adjust your operations or invest in training staff so there always is a second option whenever something goes wrong.

With EVs: From Novel to Mainstream to Essential

Fri, 25 Sep 2020 00:00:00 -0500

Many people would be surprised to learn that electric vehicles (EVs) have been around since the 1830s — even before the internal combustion engine. Car and Driver tells the story: Around 1832, Scottish visionary Robert Anderson created a motorized carriage that ran on galvanic cells (batteries). About 50 years later, English inventor Thomas Parker helped deploy electric-powered trams. By 1893, a prototype EV designed by Scottish chemist William Morrison was a sensation at the Chicago World’s Fair.

Fast-forward 150 years, and new regulations get people charged up about EVs once again. It’s not long before we have the GM EV1, the Toyota Prius — and a little Silicon Valley startup called Tesla Motors that aims to produce a luxury electric sports car with a range of 200-plus miles.

Today, industry experts are saying that the cost of EVs will match that of gas-powered vehicles much sooner than original estimates — as early as 2023. In fact, government incentives in many parts of the world have already made them cheaper. “We are on a very accelerated timeline,” Carnegie Mellon Associate Professor Venkat Viswanathan told The New York Times. “If you asked anyone in 2010 whether we would have price parity by 2025, they would have said that was impossible.”

There are a few other reasons for the accelerated timeline: As Elon Musk announced this past week, technological advances are slashing battery price tags and boosting storage capacity for more miles per charge. He also promised to make a $25,000 Tesla within the next three years.

Set in motion

Although cost is a huge factor when car-buying, according to CNN, the biggest reason by far that people choose to purchase an EV is concern for the environment (80% of respondents). While there are debates over whether EVs are, in fact, environmentally friendly, according to CarbonBrief Factcheck, they have considerably lower emissions over their lifetime than conventional vehicles. Of course, car power is just the tip of the melting iceberg.

This week has been a significant one for the environment. First, California announced a rigorous climate goal of banning the sale of new gas-powered cars by 2035. Last year, only 8% of cars sold in the state were not gas-powered.

Additionally, the 75th Session of the United Nations General Assembly featured numerous speeches on global warming, with China — the world’s biggest source of carbon dioxide emissions — aiming for carbon neutrality by 2060.

Meanwhile, the Climate Week summit was hosted by the City of New York and the United Nations, with a goal of “exploring what lessons we can learn in the pursuit of a net-zero future.”

And perhaps most striking is a new installation of a clock that counts down the time humans have left to avert climate disaster. It started September 17 at seven years, 103 days, 15 hours, 40 minutes and seven seconds remaining. If greenhouse gas emissions continue at their current rate, when the clock runs out, the average global temperature will be irreversibly on its way to 2.7 degrees above pre-industrial levels, The Smithsonian reports. The clock also shows a percentage value representing the fraction of energy produced with renewable sources, which designers from the Mercator Research Institute on Global Commons and Climate Change call “the lifeline.”

We must work together to steer our supply chains in the right direction. The ASCM Enterprise Certification is raising the bar and empowering networks across the globe to prioritize ecological stewardship while becoming more competitive in today’s business world. The first step is a simple, five-minute questionnaire to evaluate your supply chain maturity compared to the three program pillars of economic, ecological and ethical business practices. Let the ASCM Enterprise Certification map a route to your supply chain’s lasting success.

Leading Through Uncertainty

Thu, 24 Sep 2020 00:00:00 -0500

“It is our attitude to events, not events themselves, that we can control,” the Greek philosopher Epictetus once wrote. Nearly 2,000 years later, these words still ring true. In times of fear and uncertainty, like the ones we experienced this year, there is only so much we as people managers can do to control or improve the situation. What we can do, however, is lead with transparency, clarity and resilience.

Supply chain is a domain that is used to dealing with various types of disruption: issues with raw material production, labor shortages, transportation difficulties and so on. Each of these micro-disruptions can be mitigated, avoided or reconciled through good working practices. When it comes to macro-level disruptions, strong, effective leadership is essential to providing inspiration and helping your workforce push through the challenges — many of which fall outside of the company’s control.

This is not to say that such circumstances require pontification and showing off your leadership prowess. Rather, use your experience and expertise to react to the situation with speed, agility and a sense of purpose, and clearly explain to employees what is happening and why. An absence of information often fuels negative speculation, which can have a detrimental effect on morale and overall business operations. Effective leaders use all the tools at their disposal to reach their teams, whether by phone, email, collaboration tools or other communication methods.

Don’t spend all of your effort trying to offer solutions where none exist. Instead, focus on reinstating the vision and purpose of the organization’s mission, listening to your people about their concerns, and reassuring them. You can’t provide all the answers to the current crisis, but your people need to know that there is stability and dependability at the top. If you have a business contingency plan, share it. If you don’t, be honest and state that you are actively working on one and that you will share it soon. There is nothing to be gained from keeping information from your employees. In fact, your honesty might even inspire some to step up and assist as part of a crisis-management team.

As supply chain leaders, we tend to deal with large workforces that are geographically distributed. Some teams may be based in different buildings or different countries. Geographic distance often results in cultural differences, which can be even more apparent in times of great stress. The best leaders understand that adapting their communication styles is necessary for effective communication across borders. One feature that should never change, however, is a commitment to authenticity.

When working with a spread-out workforce, it is even more important for communication to be a frequent, bidirectional — or even multidirectional — practice. Set a cadence to keep your teams updated on progress, even if that progress is small. The continued focus on problem-solving ensures that everyone in the organization knows you are actively working on the situation and that it is top of mind for you and the rest of your leadership team. Furthermore, always welcome feedback and ensure people know they can share ideas or criticism without fear of getting in trouble. Directly address any feedback that requires a response.

Above all, engage your workforce, show employees that they are being heard, and prove to them that the leadership team is actively engaged in issue resolution.

Times of crisis require excellent leadership skills. The supply chain profession has operational nuances that make some stressful times even more challenging than they are for other business units. But with the right focus and engagement, a strong and insightful leader can help a team and organization overcome significant difficulty and even flourish when they emerge on the other side.

How to Manage Your Supply Chains Now and After COVID-19

Tue, 22 Sep 2020 00:00:00 -0500

During the COVID-19 pandemic, key retailers including Walmart, Kroger, and Bed Bath & Beyond are keeping their businesses operational and protecting their employees and customers by leveraging three key strategies: virtual inventory pooling, last-mile delivery and omnichannel technology. These strategies, which we refer to as real options, are delivering value during the pandemic but will continue to drive business in the future. They infuse companies with the flexibility and agility to survive seismic market disruptions and help them maneuver into stretch opportunities for success, such as by repurposing stores, rebalancing inventory, refining how merchandise reaches customers and developing other technologies to support success.

Let’s take a deeper look at each of these real options for supporting business during challenging times.

Real option 1: Virtual inventory pooling

While most nonessential brick-and-mortar stores were closed during the pandemic, direct-to-consumer e-commerce sales approached Cyber Monday levels. To satisfy the tsunami of orders, retailers virtually pooled their inventories, implementing the every-store-is-a-warehouse-and-every-warehouse-is-a-store strategy.

Virtual pooling enables retailers to use both brick-and-mortar store inventory and warehouse inventory to fulfill customer demand. This use of retail inventory to fulfill online orders reduces delivery lead times and last-mile costs — connecting customers, products and inventory regardless of location or channel.

Bed Bath & Beyond closed its stores to customers in response to the COVID-19 outbreak but leveraged them to fulfill online orders as if they were warehouses. While adhering to social distancing mandates, store associates picked, packed and fulfilled e-commerce orders directly from store shelves, replacing distribution centers.

Virtual inventory pooling accommodates channel-agnostic, digital commerce by providing the flexibility to ship inventory from anywhere to anywhere. Because supply chains were heavily disrupted during the pandemic, inventory was not replenished in a timely manner by suppliers. It wasn’t a surprise when distribution centers faced stockouts for fast-moving stock keeping units, like toilet paper and flour. Stores can use their inventory to satisfy customer demand during an emergency. Plus, because stores are physically closer to consumers than distribution centers are, store inventory can be used to respond more rapidly and efficiently to orders. This real option provided Bed Bath & Beyond with the agility to handle significant fluctuations in orders and the flexibility to use inventory assortments across locations.

To realize such a strategy, though, company structure and reporting relationships must change. First, the company needs to adopt an inventory-agnostic perspective: a sale is a sale, no matter the channel. Second, the company needs to incentivize brick-and-mortar associates by sales period, rather than specific-store sales.

Real option 2: Last-mile delivery

Earlier this year during the Super Bowl, a Walmart commercial featuring aliens, Buzz Lightyear, LEGO characters and more showcased the retail chain’s click-and-collect service, which allows customers to order items online and then pick up their products at special drive-up spots outside the stores. For a seamless customer experience, customers can use the Walmart app to check in at the store and digitally alert store staff that they are ready to pick up an order. When location services are enabled on customer apps, store staff can even track customers as they drive to the store. Then, they can load orders into customers’ vehicles, often delivering a socially distant transaction.

Kroger also implemented new in-store technology during the pandemic called Quevision. This platform ensures social distancing among store customers by — among other things — regulating the number of customers entering the premises.

Like at Walmart, customers also can place Kroger orders through the store’s website or app for pickup. Once the customer arrives at the store, he or she can call the store, provide the parking spot number and provide a description of the car to ensure swift and accurate delivery.

Many grocery stores use third-party companies like Instacart and DoorDash to pick, pack and deliver online orders. This allows the retailer to scale click-and-collect and delivery services quickly, bypass internal labor allocation and training issues, and avoid some steep investments in technology. Most third-party companies have apps that easily integrate with retailer inventory and ordering systems, providing smaller grocery chains and independently operated grocery stores with real options to compete on a technological level with national chains.

Walmart’s and Kroger’s commitments to click-and collect capabilities before the pandemic highlight a last-mile real option that is scalable and convenient and helps smooth demand while attracting new customers. The real option also offers agility by allowing businesses to respond to surges while keeping customers safe and flexibility by managing high levels of fill rates through substitutions. In addition, the strategy helps optimize inventory when orders are placed in advance and then picked up a couple of days later.

Real option 3: Omnichannel technology

To implement the previous two real options, retailers need technology to deliver the agility and flexibility to scale their operations and adjust to whatever volatility comes their way — preferably without a linear increase in costs despite the increase in complexity.

Walmart’s technology expenditures decreased its labor costs while increasing customer service and satisfaction. For example, its Bossa Nova robot scans shelves for out-of-stock items and incorrect prices and updates the system automatically, guaranteeing that changes in assortments are transparent to shoppers without increasing tasks for store associates. Walmart has reportedly built automated miniature fulfillment warehouses in the back of its stores to increase productivity associated with order picking and to accommodate surges in online orders — again without adding pressure on store associates.

Virtual inventory pooling requires distributed order management (DOM) system capabilities to govern critical processes. The first capability is real-time inventory visibility and management across all business channels, which is essential for accurately tracking inventory availability by location. The second capability is software that is configured with accurate business rules that address real-time decisions. For example, such rules can help determine which is the optimum location for fulfilling a particular order. These rules must account for several factors, including split order logic, inventory levels, labor capacity and service levels. Companies also must be disciplined in how they treat returns and record damages. Furthermore, the DOM application must be integrated across the entire omnichannel value chain — from the customer experience on the web or in the store to the final product delivery.

However, omnichannel technology does not have to be complex. Instead, smaller stores can take orders by phone or text message and prepare them for delivery or in-store pickup. This method is more labor intensive, but it can help the retailer offer

click-and-collect-style services.

Managing retail recovery after the pandemic

Virtual inventory pooling, last-mile delivery and omnichannel technology investments provided retailers with real options to deliver agility and flexibility during the pandemic. To manage retail recovery afterward, companies must continue to develop these real options, leverage technology to drive virtual inventory pooling, utilize their asset bases in a way that is channel-agnostic and employ flexible last-mile delivery modes.

Now that customers have been forced to experience new shopping options during the COVID- 19 outbreak, the retail landscape is undoubtedly changed forever. We expect customers in the future to be more open to subscription services for repeat purchases that are automatically scheduled for delivery or pickup. Stores may become smaller, reduce assortments and quantities, or use more technology to reduce labor costs while improving service.

These real options will become the new norm for retail competition. Companies that embrace these options will create new opportunities to succeed in the emerging retail environment.

COVID-19’s Relentless Attack on Working Mothers

Fri, 18 Sep 2020 00:00:00 -0500

The pandemic is leaving working parents everywhere in urgent need of virtual learning and childcare solutions. Working mothers are getting hit the hardest, as moms take on a disproportionate share — close to 70% — of household duties, according to research from Northwestern University. And the misaligned reopenings of businesses, schools and support services are compounding the issue by driving these women out of the labor force while amplifying their family responsibilities.

CNN reports that one in five adults is currently unemployed as a direct result of the pandemic upending their childcare arrangements. Of those parents who are forced to choose kids over career, mothers are nearly three times more likely than fathers to stay home. They’re also more liable to lose their jobs for good. “The impact could last a lifetime, reducing their earning potential and work opportunities,” a New York Times article states. “Women who drop out of the workforce to take care of children often have trouble getting back in.”

I recently had the opportunity to speak with BBC World News America Lead Anchor Katty Kay at this past week’s ASCM CONNECT annual conference. She drove home many of these points, helping me better understand the challenges that women have entering and maintaining their roles within the workforce.

Many of Kay’s lessons were echoed by Betsey Stevenson, an economics and public policy professor at the University of Michigan and a former chief economist at the U.S. Labor Department, in The Times article: “This pandemic has exposed some weaknesses in American society that were always there, and one of them is the incomplete transition of women into truly equal roles in the labor market.”

Another factor that really can’t be ignored is that the choice to quit and stay home is a luxury only available to women with a certain kind of financial freedom. Low-income parents have scant alternatives. And for single, low-income parents, it’s simply not an option. One-third of children in the United States live with a single parent.

Limited near-term solutions

Some cities, companies and organizations are trying to make an impact. San Francisco has opened free learning hubs to support distance learning, prioritizing low-income families, children in public housing or the foster care system, and homeless youth. Many businesses are offering new telecommuting options and childcare stipends. And companies including Salesforce, PepsiCo, Pinterest and Uber signed a pledge to provide more flexibility and resources for working parents.

“Manufacturers are shifting worker schedules, adding on-site day care and helping employees find other child-care arrangements as they work to increase output,” a recent Wall Street Journal Article notes. “About 45 children of Toyota Motor Corp. employees are attending a new virtual-learning center at a car plant in Georgetown, Ky., run by Bright Horizons Family Solutions Inc. The children use laptops to do schoolwork, while in-person teachers monitor their progress. Toyota said this has helped workers show up and be more productive at work.”

Each day, we’re seeing new examples of how the consequences of COVID-19 will long outlive the pandemic itself. Working mothers are on a dismal path, with years of potential obstacles stripping away many of the gains they’ve made with regards to equitable jobs and pay. I encourage supply chain leaders to consider some of the options stated here for their own organizations. Diversity of thought and contribution — especially from women — is essential to business success. We can take this important stand together.

ASCM CONNECT Leads Supply Chains to Transformation

Wed, 16 Sep 2020 00:00:00 -0500

Day 3 of ASCM CONNECT explored building resilient supply chains, strategies for emerging from COVID-19 stronger and better than we were before, and lots more. Check out the recap here.

How to Thrive in the Digital Age

We’re currently living through a sixth wave of global disruption: the digital age. And just like the previous five, it’s both an opportunity and a threat. “It is creation, and it’s destruction,” Sean Culey, president of Sean Culey Ltd. told ASCM CONNECT attendees. He explained that technology will be key to enabling supply chains to maximize sixth-wave opportunities. This will require reimagining, redesigning and aligning business models; creating more compelling value propositions; and improving efficiency and accuracy.

“So much money is being spent on digital transformation projects for so little return right now,” Culey said. “Successful digital transformation has nothing to do with technology; it’s about transforming the mindset, culture and strategy of the organization. The what and how of technology only make sense when applied to a compelling ‘why?’”

It’s essential to view digital tools as methods for innovating operations, reducing human error, streamlining processes and gaining insights into what’s actually going on in the end-to-end supply chain. The resulting transparency enables organizations to redirect human effort away from “value-destroying activities toward value-creating ones,” Culey said, adding that the ultimate goal is to build more reliable, agile and sustainable supply chains.

6 Ways to Safeguard Your Networks

If you don’t understand your comprehensive supply chain environment, it will be impossible to secure the risks that are present. Consequences can include product tampering, recalls, lawsuits, government fines, malware infiltrations and more. “How do you defend against these types of things?” Keith Turpin, chief information security officer at The Friedkin Group, asked ASCM CONNECT attendees. “The best methods are not technology, [but] business processes.”

Following are 6 key strategies:

Define your security requirements in every RFP. When they show up later in the contract, it can affect pricing.
Examine and document all assumptions. Too often, we assume a vendor will perform a certain way or a product will be built according to certain guidelines. Verify those things, and record them.
Ask potential suppliers how they manage risk. “Even well-established suppliers can have problems,” Turpin warned. “A lot of times in supply chain you are responsible — not only for your protection, but for the protection of everyone. You can be held accountable, even if the failure wasn’t yours directly.”
Assess supplier security, whether you’ll be sharing sensitive data or your supplier will manage critical intellectual property. Consider using a third-party service to rate suppliers.
Fully comprehend regulatory requirements for both you and your suppliers — and specify how compliance will be measured.
Identify back-up partners. “If one of your suppliers gets hit with ransomware and is out of commission for a week, what does that look like for you?” Turpin asked. “Do you have an alternative?”

Supply Chain Resilience in a Time of Turbulence

“The issue of risk in supply chains is not a new one,” The Economist’s Samantha Grenville told ASCM CEO Abe Eshkenazi during their educational session today. “What’s key here is that unexpected shocks are happening more and more often. You’ve got financial crises, you’ve got extreme weather, geopolitical turmoil, trade tensions, bush fires.” She called the current global pandemic not a turning point, but a focal point that’s shining a light on supply chain risk.

Eshkenazi noted that COVID-19 is affecting every aspect of supply chain and asked Grenville what steps will be crucial moving forward. She cited three strategies:

Agility. Organizations that are able to ingrain a culture of rapid decision-making and flexible processes can quickly respond or adapt to changing market conditions.
Visibility. To fully understand vulnerabilities and dependencies throughout the value chain, this must involve cultivating relationships and monitoring direct suppliers, as well as those that are many levels removed.
Planning. It’s important to stress test to see whether you can withstand a big shock — and be sure to plan to the results of that test.

To learn more about ASCM’s partnership with The Economist, visit ascm.org/supply-chain-resilience.

Supply Chain Visionaries Talk Visibility

Is it time to redefine supply chain visibility? Panelists Amy Augustine, director at U.S. Cellular; Jason Gillespie, director at DHL; Jonathan Root, program manager at the NASA Goddard Space Flight Center; and David Shillingford, chairman of Resilience 360, considered that vital question along with moderator Greg Schlegel, adjunct professor at Lehigh University. “Whether it’s a pandemic or severe weather or geopolitical risk or the hundreds of other things that might happen,” Shillingford stressed that the answer is the same: visibility.

“Knowing who your supplier is, is great,” he said. “But if you don’t know where the facilities are, you’ve got a real blind spot. If you don’t know the tier two supplier, it may or may not matter.”

Gillespie noted that most supply chains probably have some kind of visibility, but not all they want and need. “Many also need to manage a large network for a lot of customers, who have very large networks themselves,” he noted. “What’s the right information to really filter up to the top?”

Root said that NASA is using dashboards to better see what’s going on and how their networks are functioning. He said that it’s been very critical at this difficult time to understand the things that are influencing the supply chain— and to digest them in order to figure out what to focus on. He added, “The pandemic has reinforced the importance of fulfilling that challenge to build this magical thing called visibility.”

At ASCM CONNECT, Supply Chain Moves the World

Tue, 15 Sep 2020 00:00:00 -0500

Day 2 of ASCM CONNECT was full of inspiring presentations from the best minds in the business. Read on to learn how to become an impactful leader and how to make your supply chain one that truly creates a better world.

3 Ways to Become a Transformative Leader

Do you have “hidden saboteurs” stopping you from showing up as the transformative leader you’re supposed to be? Amir Ghannad, founder of The Ghannad Group, assured ASCM CONNECT attendees that there’s a transformative leader within each and every one of us — it’s just a question of discovering them. He shared a series of habits that can help people overcome what’s holding them back and then “courageously pursue and abundantly achieve the extraordinary.”

Here are three takeaways from his educational session:

Declare a future that you can get excited about. “If I wake you up at two o'clock in the morning, you ought to be able to tell me in 20 seconds flat what you're excited about,” Ghannad explained. Transformative leaders know how to talk to people about what excites them, which gets others excited about it too.
Treat your commitments as binary: 100% or 0%. And it’s possible to be 100% in on multiple endeavors; it just requires being honest with stakeholders. “You have to say to them, ‘Look, for the next three weeks, I'm not able to do anything with this.’ The problem comes in when we say yes to a lot of people, but we’re not in communication. Then they're waiting for us to give them something or to communicate something, and we’re missing in action.” If you have 50-50 commitments, it’s time to go all in or eliminate them.
Show up with enthusiasm. “Find the connection between what you do and the purpose that your organization is serving, and latch onto that,” he said. “You’ll see an immediate positive shift.”

A Game-Changing Supply Chain Maturity Model in Action

ASCM is supporting African ministries of health to solve critical supply chain challenges through the Global Health Supply Chain Maturity Model (GHSC MM), generously funded by the Bill & Melinda Gates Foundation. The goal is to build the community and orchestrate a series of small projects that lead to incremental public health supply chain improvements. Today at ASCM CONNECT, Glenda Maitin, SCOR-P, program director of public health initiative, spoke with ASCM’s John Stults, director of customer experience, about how far the undertaking has come.

“We're continuing to make very, very good progress,” she said, noting that the Supply Chain Operations Reference (SCOR) model has shaped strategy and encouraged supply chain professionals to view their networks in a whole new way. After two years in action, 136 facilitators have been trained to help with assessments at the regional, subregional and national levels. Importantly, the program is also advancing African health care supply chains’ response to COVID-19 and improving access to life-saving products for better outcomes.

“Supply chain leaders can analyze the performance of the supply chain. They can identify targets for improvements,” Maitin explained. “The energy and excitement of utilizing SCOR is amazing. If you give people the tools, they can do so much.”

The program is built upon a free, cloud-based maturity model. The assessment uses data visualization to drive ongoing improvements, organize and prioritize changes, identify constraints as they emerge, and advance overall performance. It also teaches team members how to plan and collaborate effectively with partner organizations. The GHSC MM provides a roadmap to supply chain gaps and opportunities for improvement, whether in a developing region or an established market. Learn more at ascm-ghsc.org.

As the World Slows Down, Supply Chains Speed Up

During the pandemic, being able to support customers and patients with both everyday conveniences and critical healthcare needs has been the focus for supply chains across the globe. Duncan Brock, group director at CIPS; Jim Townsend, chief procurement officer for the Walgreens Boots Alliance; and Brian Jamison, national director of strategic procurement at PulteGroup discussed how their organizations have strived to achieve this goal, while protecting team members.

“As the world slowed down, it felt that the business really sped up,” Townsend observed. “Everybody in the United States — and I suspect in many countries around the world — was surprised at how quickly this came upon us. ... The pace that this happened was truly surprising.”

The panelists agreed that there are four key steps that have been shared by successful supply chains during the pandemic:

Stabilize supply and make sure stores and facilities can operate effectively.
Achieve “commercial containment” to align costs with revenue.
Manage associated risks. “Comfort managing ambiguity is not a common skill,” Jamison noted. “And you’ve got to be able to communicate supply chain risk throughout the organization — not only upward to the C suites, but you have to be effective at the local level.”
Plan for the future by figuring out what needs to change and what needs to be built.

Moving forward, the panelists agreed that communication and collaboration with partners will continue to be vital. “We’re speaking to our manufacturers more than we have in the past four months — and probably we have in the past year,” Jamison said. “We want to understand more about the supply chain and manufacturing process, more about their business and how it affects ours, and continue that collaboration between the two for that symbiotic relationship moving forward. That’s something we don’t want to lose.”

Take a Virtual Walk Through the Expo Hall

ASCM annual conference attendees have come to expect the best from the expo hall when participating in person. This year, they’re enjoying the opportunity to see and engage with the latest offerings from industry-leading organizations in the virtual Solution Center. Complete with a map of exhibitors that makes you feel like you’re right on site, the Solution Center helps people update their knowledge of the latest technologies, discover new solutions to immediate and long-range business needs, and uncover emerging trends.

During Day 2, attendees connected with the supply chain solution providers to learn more about products and services designed specifically for aerospace, aviation, automotive, consumer products, electronics, food and beverage, health care, retail, pharmaceuticals and many more.

How to Network Virtually

ASCM CONNECT is offering networking from anywhere so attendees can develop the same kinds of valuable relationships that they would while on-site. Through the ASCM Events App, participants can grow their networks and connect to the global ASCM community by messaging fellow attendees, posting about the conference’s industry-leading content, and much more.

ASCM CONNECT Delivers Need-to-Know Insights

Mon, 14 Sep 2020 00:00:00 -0500

“Supply chain leaders have an opportunity to collaborate, to make a difference and to ensure that supply chains lead us out of this pandemic,” ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE, told today’s virtual ASCM CONNECT audience. Joined by Board Chair Antonio Galvao Costa, CSCP, CLTD, CTL, the two encouraged attendees to work collaboratively across cultures and time zones to ensure a sustainable recovery.

Galvao described ASCM CONNECT educational sessions as “the topics that matter” — such as digital transformation, resilience, the circular economy and many more offerings specifically designed to help attendees optimize performance across the extended supply chain.

Read on for some of the highlights from Day 1’s best-in-class supply chain education.

Katty Kay Urges Women to ‘Act More, Think Less’

When it comes to success, BBC World News America Lead Anchor Katty Kay says confidence matters as much, if not more, than competence. Unfortunately, research shows that women are much more likely to lack that critical self-assurance in their powers and abilities.

“So many women [are] holding themselves back,” the bestselling author said. “It’s not because of lack of qualifications or competence; it’s because they lack confidence.” She explained to ASCM CONNECT attendees that her team has asked countless senior women how they rose to the top. Time and again, the answers involved being lucky or in the right place at the right time — rather than simply having earned it by being great at what they do.

“When you start digging into the social science data behind this issue of confidence, there is a ton of evidence that this isn’t a confidence gap, but instead a confidence chasm, between men and women,” she said. “In the professional sphere, our confidence seems to erode.”

Kay encouraged women to act more, stop worrying about being perfect, and get outside their comfort zones. Then, she made the point that businesses also have a role to play by championing risk-taking and reassuring employees that there is a safety net: “Be transparent about risk. Be transparent about the potential for failure or messing up and what happens around that. And then keep encouraging them to get back in the saddle.”

Johnson & Johnson’s Digital Transformation

Johnson & Johnson’s supply chain team is composed of 60,000 people — which equals about half of the corporation’s global workforce. They operate in six continents; manage 100,000 orders each day; and have about 300,000 commercial customers, including retail giants and vast hospital systems. Now, the company is reimagining its supply chain operations through a lens of innovation. Donika Kirk, vice president of global delivery excellence, shared some of the key strategies with ASCM CONNECT attendees.

“We are seeing on-demand personalization, artificial intelligence, virtual reality and 3D printing coming to the forefront,” she said. “Digital transformation is here, and our ability to learn and translate those learnings into action with speed is absolutely a competitive advantage.”

Kirk added that having everything and everyone connected enables the organization to streamline processes and give customers exactly what they want, when they want it and how they want it in a simple, efficient and profitable way.

The digital innovations Johnson & Johnson is leveraging across its value chain are also providing enhanced agility, visibility and essential data insights. They are helping the organization prioritize what matters most to customers. “Digital really underpins and accelerates everything we do,” Kirk said. “Digital capabilities are opening up the way we’re working, and they’re changing how we connect.”

4 Steps to Superior Supplier Relationship Management

Michelle Lombard, CPIM, director of supply chain and production planning at SeaSpine, believes supplier relationship management works best when it’s an inclusive activity. In her educational session, she offered clear strategies for involving others in the process, noting, “You can’t do it by yourself and you shouldn’t do it by yourself — or you will fail.”

She shared the following strategies to help create a competitive advantage:

Segmentation. Begin by reviewing your current program. All the stakeholders need to be in the room, deciding together on the criteria that makes a tier one supplier.
Governance. Lombard suggested using a simple RACI diagram to categorize people’s roles. She described this as a way to “non-emotionally” break down the tasks of everyone involved in supplier relationships.
Performance management. “Notice I did not say ‘scorecard,’” she stressed. “Performance management is much broader. … You’re setting the tone for your suppliers.” She added that this requires two-way communication and collaboratively creating roadmaps to future plans.
Supplier development. Lombard said this final step will come naturally once the first three are in place because you have cleared the channels of communication, built trust, are measuring what’s important and have common goals. It’s here that the supplier becomes a strategic partner. “Celebrate this victory together,” she urged, “that’s the icing on the cake.”

The Circular Supply Chain Movement

Day 1 of ASCM CONNECT was rounded off with a discussion on the intersection of sustainability and supply chain. John Davies, vice president and senior analyst at GreenBiz Group interviewed Lisa Brady, director of supply chain sustainability, risk and circular economy at Cisco, and Dave Stangis, founder and CEO of 21C IMPACT. They considered what it means to embed sustainability into the supply chain function.

A key element of this is, of course, the circular economy, which Brady called “a growing buzzword” that nevertheless represents something very significant. “It's really about thinking about how we use our natural resources,” she explained. “It’s about how you grow your businesses and grow your products with the fundamentals of keeping them in use longer and using materials longer, designing out waste and pollution from the very beginning, using fewer natural resources, and regenerating whatever resources you do extract from the earth.”

She stressed that, as we continue to run out of natural resources, supply chain organizations must think about their products and the materials used to make them as valuable goods, not something to be discarded. Then, the next vital step is solving these problems together in the context of a much larger ecosystem. “These are not problems that a single company can solve on their own,” Brady said.

Stangis noted that he’s had success using stories to increase understanding and change minds in myriad situations. He said finding interesting narratives — connected from an ingredient source all the way to the product endpoint — helps people appreciate what’s at stake while building trust and transparency. As he put it, “Talk about them as mapping real issues that are affecting everything.”

Closing the Opportunity Gap

Fri, 11 Sep 2020 00:00:00 -0500

The extreme disruption of COVID-19 is having a profound impact on the labor market and threatens deep, long-term damage to the overall economy. The upsurge in telework by higher-paid workers, the rise of automation, and fewer people traveling and dining out are all disproportionately affecting service employees. A recent Wall Street Journal article says the resulting ripple effect will be “good for professionals — and bad for everyone else,” intensifying inequalities that have been in place for decades.

“For many professionals, technology has been a lifeline during the pandemic, enabling them to be productive while stuck at home,” Christopher Mims writes in the Journal. “For many other workers, it is a new dividing line, corralling them further into the stagnant corners of the economy.”

Moreover, numerous experts believe the pandemic will permanently decrease the number of people who work in an actual office, as well as business travel, which is an enormous revenue source for hotels and restaurants.

According to a U.S. Federal Reserve survey, 39% of employed people in households that earn less than $40,000 a year were furloughed or lost their job this past March; for households earning more than $100,000 a year, that number was only 13%.

Meanwhile, many small businesses are being completely wiped out. The U.S. Chamber of Commerce reports that 58% of small business owners are concerned that they may have to permanently close. Of those who have laid off employees, 48% say it will be three months to a year before they can rehire.

Wise investments

Adapting people’s competences to the post-pandemic marketplace is essential to getting individuals back to work, buoying communities and rebuilding economies. And this endeavor involves much more than telework and technology; it requires effective education, upskilling and reinventing traditional business models.

This topic and many more will be explored at ASCM CONNECT, September 14-16, along the Talent, Leadership and Culture learning path. At this virtual event, attendees will learn how to develop the next generation of supply chain professionals for their organizations while gaining essential technical and leadership skills to advance their own careers.

ASCM is also offering support for those who are out of work through a three-part series on pandemic-era job search strategies hosted by ASCM’s Career Coach, Rodney Apple. There’s special pricing for anyone who is currently unemployed.

And as always, we’re here to support corporations and individuals with a vast array of professional development programs, including APICS certifications and a body of knowledge that has been the global standard in supply chain learning and development for more than 60 years. I hope you’ll take advantage of these valuable member benefits.

Master the Supply Chain Logistics Evolution

Wed, 09 Sep 2020 00:00:00 -0500

A modern era of innovation is reshaping the logistics and transportation industry, bringing about exciting proficiencies and opportunities. Although many innovations are brand new — some still in the testing phases — each holds significant promise and strong potential to complement and advance existing technologies and processes.

In Jabil’s Global Supply Chain Trends survey of decision- makers at companies with more than $500 million in annual revenue, 58% of respondents said that logistics would benefit most from improved technology. And it makes sense: Some original equipment manufacturers (OEMs) are relocating their manufacturing in response to market forces affecting global supply chains, which have a significant impact on their logistics processes.

Logistics and transportation are essential elements of supply chain management. Their ongoing evolution — driven by the internet of things (IOT), blockchain, autonomous vehicles, 3D printing, omnichannel commerce and much more — makes it essential for industry professionals to always keep learning. The most effective leaders are those who invest in innovative and inventive supply chain strategies, particularly with regards to last-mile challenges.

MAKE THE MOST OF YOUR SUPPLY CHAIN DATA

For today’s global networks, logistics and transportation visibility demands sophisticated coordination across numerous geographies, as well as the integration of warehouse management; accounting; enterprise resources planning; and, of course, transportation management systems (TMSs). Indeed, we have traveled many miles from the simple goal of figuring out how to get something from A to B.

According to Inbound Logistics’ 2019 Logistics IT Market Research Survey: “Corporations continue to seek business intelligence solutions that help create a competitive advantage through reduced [supply chain] costs, increased efficiency and better decision-making capabilities. This includes the continued automation and convergence of transportation management, accounting and accounts payable systems. Accounting departments require accurate accrual and allocation of transportation expenses. Supply chain/logistics departments seek greater visibility and timely access to their data to manage and control processes.”

Interestingly, workable solutions include everything from simple sensors and smartphones to the age-old electronic data interchange (EDI) and application programming interfaces (APIs). The less expensive tools enable users to scan and sort items, check for special conditions, categorize highvalue or timed packages, record a signature and photograph a delivery spot, and determine on-time delivery. On the other side of the spectrum, EDI and APIs offer a foundation for digitizing logistics and transportation procedures to achieve all new levels of collaboration and end-to-end visibility.

Supply chain management professionals need these kinds of insights in order to detect both risks and opportunities — and proactively respond. Data from bills of lading, carrier invoices and tracking information, for example, is uniquely valuable and should be maximized. Likewise, it’s important to capture shipment details, including origin, destination, current location, mode, weight and the like. Only when all of this information is considered can you attain a truly holistic view of your logistics and transportation activities.

Perhaps most importantly, you must know what you want from your data and how to ask for it. Dashboards are very helpful here, in that they take the information and bring it to life, transforming it into actionable business intelligence. Metrics then make it possible to clearly see and drill down into the things that are most important to your logistics and transportation goals, such as cost savings, as well as missed consolidation or operational improvement opportunities. In addition, supply chain network optimization should be part of your arsenal.

For organizations that move product in different ways, IOT can be an important communication tool for simplifying transportation complexity. Real-time inventory, shipping, receiving, track and trace, and workflow data capture across such multi-party networks via the IOT can create a significant competitive advantage. Nearly half of the Jabil survey participants say that IOT has the most potential to benefit their organization’s supply chain.

DRIVE LOGISTICS WITH BLOCKCHAIN

Many logistics and transportation teams are now using blockchain — digital ledgers that generate trusted transactional data. Blockchain provides all parties with detailed information on a product’s encounters from point of origin to destination, while guaranteeing there is no fraud in the related transactions. Users cannot misrepresent a shipment, its journey or how funds changed hands.

“With these benefits in mind, it’s no wonder that the logistics field is enjoying a new level of transparency as a result of achieving this single truth of the status and location of goods,” writes Ron Crabtree, CIRM, SCOR-P in SCM Now magazine. “For example, when an export consent document is created for a trade bank or government, the exact same documentation format is used from end to end, making fraudulent annotations difficult or impossible to insert. If there are any discrepancies, the import bank can withhold payment until the issues are resolved. With the huge volume of transactions in international trade, this streamlining is a big deal.”

Crabtree goes on to explain that blockchain facilitates compliance by, for instance, requiring verification of the gross mass of a container before it can be loaded onto a vessel. Every party in the transaction has access to a container’s sequential events and encounters from origin to destination. And from payment- and receipt-verification perspectives, no one can cheat the system by misrepresenting goods, tariffs, taxes or even the entire shipments.

Blockchain also enables failsafe collaboration among shippers and carriers with disparate databases, speeding movements, sharpening accuracy, reducing expenses and sending alerts and updates in real time. The logistics and transportation opportunities are boundless, as the once laborious process of keeping tabs on every piece of your value stream becomes simpler and securer.

ATTRACT DRIVERS WITH AUTONOMOUS VEHICLES

Collision-warning systems and adaptive cruise control are finding their place in supply chains, and fully autonomous vehicles are not far behind. While these innovations are unlikely to ever fully replace current logistics and transportation modes, they do have significant potential that industry players must not overlook. Cost savings is one clear advantage; however, there are other benefits worth considering, including an enhanced driver experience and safer operations.

Automation technologies take control of steering, accelerating and braking, thereby relieving stress for truck drivers, reducing fatigue and helping them feel refreshed. Notably, autonomous vehicles may help fill the logistics industry’s talent shortage by modernizing the profession. Heightened safety is another important potential advancement. A fully automated truck lowers the possibility of an accident — including one due to mechanical failure — because the system monitors the vehicle and sends an alert if maintenance is required.

According to the McKinsey & Company report “Distraction or disruption? Autonomous trucks gain ground in US logistics,” what all of this means for logistics and transportation professionals is that autonomous vehicles have the potential to dramatically change supply chain operations: “Industry consolidation would transform a fragmented industry that struggles to attract sufficient drivers into a digitally enabled short list of providers. OEMs and new entrants might compete for transportation-as-a-service share. And companies might tap their latent capacity through near-24-hour operations. In the long term, each company should review these changes to the ecosystem and determine where it wants to play — and what it will take to win. This will require an understanding of the technological developments as well as the customer and competitor landscapes.”

DELIGHT CUSTOMERS WITH ADDITIVE MANUFACTURING

As manufacturing plants and their distribution centers move closer to end customers, delivery times are shrinking, and organizations are achieving significantly greater efficiencies. Logistics and transportation professionals can take this a step further by exploring the potential of adopting additive manufacturing.

According to the Eno Center for Transportation, many centralized manufacturing operations are primed to give way to smaller manufacturing hubs near end users or businesses printing their own products. The report “3D Printers: Changing Transportation As We Know It” lists four key impacts, which include changes to truck traffic patterns and the types of trucks being used (such as smaller vans); a reduction in port traffic and long-distance distribution, which will cause a decline in the cargo industry; a shift from traditional business models to strategies that can quickly shift location and products to serve fluctuating demand; and less air cargo as parts are manufactured right when and where they are needed.

Many retailers may close as more orders are fulfilled by the manufacturer and delivered directly to consumers. To help make possible the direct-to-consumer model, logistics and transportation companies should consider exploring the management of 3D printing raw materials. Indeed, as 3D printers become commonplace among the general public, home delivery of raw materials will be another opportunity to explore. This is a worthwhile prospect for any provider with the resources to help build this new sector.

3D printing saves time, offers unique and innovative ways to delight customers, and alleviates the need to maintain inventories and expensive warehouses. Additionally, both businesses and the environment will benefit from significantly less wasted material during the additive manufacturing process. “3D printing will offer numerous opportunities to provide new approaches and solutions to existing transportation issues, while providing efficient ways to work,” Eno’s Bill Ankner writes. “At the same time, the technology is likely to pose many challenges to the way transportation agencies plan and conduct their business. … These circumstances will require transportation decision makers to be agile and decisive.”

OPTIMIZE AND CONSERVE WITH OMNICHANNEL OPTIONS

A complete customer experience requires logistics and transportation professionals who can navigate the many intricacies of omnichannel commerce. After all, it’s clear that today’s consumers expect personal, seamless service, no matter where or how they shop.

“The rapid growth of mobile technology and e-commerce has dramatically changed retail behaviors and the needs of the supply chains that support these behaviors,” says Eva Ponce, Ph.D., of the MIT Center for Transportation & Logistics. “Omnichannel retailing brings a number of challenges, including the need for more coordination between trading partners, more complex logistics networks that support and integrate multiple distribution channels and delivery models, as well as increasingly high consumer expectations regarding the convenience and reliability of delivery services.”

Additional omnichannel challenges revolve around proper inventory management; getting teams, including retail associates, aligned; and helping customers maintain reasonable expectations.

Logistics and transportation professionals should evaluate the way shipments are transferred to a distribution center or retailer, the routes taken, and how important messages and events are managed while a product is in transit — especially when using a third-party provider. Furthermore, today’s consumers want the ability to go online at any moment and see the precise location of their package, be alerted if there are any problems and get a delivery time estimate. With visibility being crucial to both the business and its customers, omnichannel demands synchronized data across numerous locations and systems — similar to the challenges mentioned previously with regards to the effective use of data.

Although different from omnichannel, subscription-based models are intriguing opportunities, as well. They not only enable supply chain professionals to forecast more easily, but also offer consumers lower costs. Along the same lines, some companies are educating customers on the value of choosing a particular, fixed delivery day. This makes it easier to consolidate shipments, save fuel and miles on the road, and reduce the organization’s carbon footprint. Although not everyone will get on board, the benefits of a more environmentally friendly logistics and transportation process would convince many consumers to modify their behavior rather than insisting on instant gratification.

BUILD COMPETITIVE ADVANTAGE WITH A TMS

Gone are the days when logistics and transportation organizations stayed in their own lane. What was once a heavily segmented playing field, in which players focused on only their core competencies, has become a landscape of limitless opportunity.

Supply chains are moving goods in all new ways. Value streams are becoming more complex; still, they offer unparalleled opportunity. Partner, customer and competitor landscapes are creating entirely new challenges. More customer orders are coming directly off the manufacturing line and into packaging. Consumers are instantly tracking orders across oceans. And yet, we are only touching the surface of the logistics and transportation implications. The bottom line is this: Visibility into product, package and journey are absolutely essential to customer satisfaction and long-term business success.

The APICS Certified in Logistics, Transportation and Distribution (CLTD) designation will help you understand and maximize new supply chain technologies, trends and solutions. The CLTD program gives you everything you need to effectively demonstrate in-depth expertise of essential concepts in order to streamline operations, boost your organization’s bottom line and set you apart from your peers. Learn more at ascm.org/cltd.

This article was originally published on the Jabil Blog.

Resilience in a Time of Adversity

Thu, 03 Sep 2020 00:00:00 -0500

As any industry professional can tell you, the global pandemic has put supply chains — and all they have the power to do — in the spotlight. One of the latest outcomes is an initiative that has just been announced between Australia, India and Japan. The arrangement is specifically designed to establish greater supply chain resilience in trade and investment among the nations.

“Digitization of trade procedures is a very important step for facilitating trade and thereby maintaining resilience in supply chains,” says Indian Commerce and Industry Minister Piyush Goyal. “This was clearly exemplified during the COVID crisis when many of the regulatory agencies were not functioning physically.”

Goyal adds that the diversification of supply chain is critical for managing the risks associated with supply of inputs, such as price volatility. “We could provide the core pathway for linking value chains in the region by creating a network of reliable long-term supplies and appropriate capacities,” he explains.

The goal is to deliver a free, inclusive, transparent, predictable and stable trade and business environment. Trade officials have been directed to work out the details for launch later this year.

“The parties have also kept the arrangement open to other countries in the region, which share similar views,” writes Subhayan Chakraborty for Business Standard. “India has suggested that greater convergence in market oriented policies, demography, growth potential, fiscal state of play including existing debt burdens and geo-political strategy may be adopted.”

The changing landscape of supply chain risk

Supply chain resilience absolutely involves multi-stakeholder collaboration to raise standards, educate users, achieve circular business models and more. According to a brand new briefing report by the Economist Intelligence Unit and commissioned by ASCM, supply chains must collaborate beyond one’s own supply chain to “recalibrate long, global supply chains to reduce fragility and manage critical dependencies.”

The good news is that, even in the midst of a pandemic, supply chain organizations can begin fostering more modern, resilient networks. This can be done by focusing on sustainability and strengthening tactical capabilities in order to prepare for and respond to disruptions. A few additional strategies cited in the report include:

Supply chain mapping: Mapping suppliers helps identify vulnerabilities and enables a quick response to disruptions.
Risk management maturity: Mature organizations prepare for disruptions by updating business continuity plans and conducting regular scenario analysis to create greater understanding of vulnerabilities.
Financial resilience: As many organizations have learned over the past few months, a fundamental aspect of resilience is the ability of company finances to absorb a shock.
Long-term risk mitigation: Companies should expand their risk horizons and develop awareness of vulnerabilities and exposures.
Ecosystem services: Assess the dependence of key suppliers on natural systems and resources, such as forests or groundwater, and understand their exposure to risks associated with environmental degradation.

The briefing report, “Supply chain resilience for an era of turbulence,” is based on a series of in-depth interviews with subject matter experts on supply chain resilience, sustainability and circularity. Given the current era of increased risk, it highlights that more focus is needed on how companies and industries can take effective steps to build resilience into their supply chains.

I invite you to learn more about this at ASCM CONNECT Virtual. During the educational session “Building Supply Chain Resilience in an Era of Turbulence,” Samantha Grenville from The Economist and I will discuss how to achieve a truly resilient network. You will gain real-world insights from ongoing research into supply chain resilience in the pharmaceutical, retail and consumer technology manufacturing sectors. Register here.

Then, the second phase of this research is a benchmarking framework that identifies best practices in both real-time and strategic supply chain resilience. It’s planned for release in early 2021. Begin the journey toward a truly resilient supply chain. Read the full briefing report and sign up to stay informed of updates and official benchmark release.

Supply Chain Salary and Career Report Reveals Rewarding Jobs and Opportunities

Wed, 02 Sep 2020 00:00:00 -0500

According to the American Psychological Association, finding a job that is meaningful and purposeful is an essential part of being happy in your career. Although what is considered meaningful varies from person to person, the most satisfied and engaged employees see their work as part of the greater good. Unfortunately, the majority of people are unhappy at work. According to a 2019 Gallup poll, 60% of workers consider their jobs mediocre or bad. Perhaps this is because, as Gallup says, people want their careers to be more than “just a job.”

In supply chain, however, that objective is being met, as industry professionals at all levels contribute to a larger goal. And today, while the whole world is experiencing uncertainty and instability in our local economies and personal lives due to the COVID-19 pandemic, the importance of the supply chain and its essential workers is clearer than ever.

The results from the ASCM 2020 Supply Chain Salary and Career Report reinforce these messages. More than 2,400 U.S. supply chain professionals participated in ASCM’s third annual survey. Following is what they had to say about being a part of supply chain.

CAREER SATISFACTION

Career satisfaction among supply chain employees vastly outpaces the rest of the country. ASCM asked professionals to rate their careers on a scale of one (unsatisfied) to 10 (extremely satisfied) and found that 70% of respondents give their work an eight or higher. Approximately 40% of respondents rated their satisfaction a nine or 10. Overall, 88% of supply chain professionals have a positive outlook about their careers.

ASCM also asked respondents to rate how likely they would be to suggest a supply chain career to someone outside of the industry. Approximately 85% of respondents said they would recommend a career in supply chain.

Those in the industry have always known that they play a crucial role in their communities and the world. But now, more than ever before, people everywhere are realizing that the supply chain plays a crucial role in the global economy. Even during the uncertainty of a pandemic, most consumers are still able to access food and essential supplies for their families, and concrete plans continue to be established for those goods to be produced and delivered going forward. Nothing tells the story of the industry’s success better than people's level of satisfaction with their jobs and the fact that they want to share that success with others.

HIGHER PAY, BIGGER RAISES

Consistently, good pay is a benefit of a supply chain career. According to ASCM’s survey, U.S. supply chain professionals with a bachelor’s degree earned a median annual salary of $78,750 in 2019, which is 24% higher than the median of other U.S. workers with the same degree. The bottom 10th percentile of those in the supply chain profession earned $52,130; in the highest 90th percentile, they made $158,000 per year. In addition to their base salaries, 91% of supply chain professionals report receiving supplementary compensation, most commonly in the form of bonuses, profit sharing and overtime pay.

Even the raises are higher among supply chain professionals. In 2019, the U.S. national average for an annual raise was 3.5%; whereas, the average raise among the supply chain professionals surveyed was 4.7%. Notably, 18% of survey respondents report receiving a pay increase of 10% or more.

Salary and growth potential are perhaps best expressed by what happens over the course of one’s career. Although supply chain workers on average make $60,000 in their first two years of employment, they earn a median salary of $90,000 by year 10 and a median salary of $103,000 by their 20th year on the job. And the supply chain field offers exponential growth for those who continue working in the field beyond year 20.

These salary increases only improve with certification, such as the APICS Certified in Production and Inventory Management (CPIM); Certified Supply Chain Professional (CSCP); or Certified in Logistics, Transportation and Distribution (CLTD) designations. Supply chain professionals who hold at least one APICS certification report a median salary 12% higher than those who are not certified and have an 18% higher salary than those with other, non-APICS certifications. Of those who hold an APICS certification, 21% higher median salary than those with no certification. Specifically, professionals in the 90th percentile who have no certifications earn $116,000 annually; whereas, those with two or more certifications earn more than $151,000 annually. Although it does require time and effort to earn a certification, many companies offer employees support while pursuing this kind of professional development.

CLOSING THE GENDER PAY GAP

One area of inequality that is evident, both inside and outside of supply chain, is the gender pay disparity. Women ages 30-39 earn 93% of the salaries of men in the same age group. The gap is larger in the 40-to-49 age range and greater still for supply chain professionals who are 50 and older. Although the gender pay gap in the supply chain industry is smaller than the national average, there is still work to be done. It is critical for business leaders to be aware of this discrepancy during hiring and promotion processes.

Interestingly, individuals in supply chain who are less than 30 years old, regardless of gender, report the same median salary. Hopefully, this is a sign that the industry is moving in the right direction for the most recent entrants to the field. However, supply chain organizations must keep in mind that it is also possible that the reasons behind these positive numbers simply reflect the fact that these women have not left the workplace to have children or take on other caregiving responsibilities. The National Organization for Women estimates that, for every child a woman has, she suffers a 5% wage penalty. Additionally, Professors Lawrence Kahn and Francine Blau at Cornell University say that one-third of the gap in female participation in the labor force is a result of poor family leave and workplace flexibility. Being transparent and intentional about diversity and inclusion policies is essential for supply chain organizations.

BIG BENEFITS

Paid time off, health insurance and workplace flexibility also are meaningful indicators for job satisfaction. For example, almost every supply chain professional ASCM surveyed (88%) said their company provides paid holidays, 78% have at least three weeks of paid time off (PTO) available to them, and 44% enjoy more than three weeks of PTO.

The survey also found that 64% of supply chain professionals have access to paid family or medical leave, 74% are offered short-term disability benefits, and 64% have access to long-term disability benefits. It’s noteworthy that people who are given PTO for caregiving are more likely to return to their jobs and stay longer, according to New America.

“When Accenture extended its paid maternity leave from 8 weeks to 16 weeks, attrition among mothers dropped by 40%,” New America’s research found. “And when Aetna expanded its maternity leave, the share of women returning to work jumped from 77 to 91%. Higher retention benefits hold true for low-wage workers as well.”

One benefit that shows the supply chain industry was ahead of its time is the ability to work from home. During the COVID-19 pandemic, remote work became commonplace — and a necessity — among nearly all industries. When this survey was conducted, that was not yet the case. Yet, more than half (52%) of supply chain professionals surveyed told ASCM they were able to work remotely or from home. In fact, 8% of professionals reported working from home are full time. The supply chain industry is one that changes with the times, letting employees work as flexibly as modern technology allows. In the coming months and years, as the repercussions of the pandemic and its effects on workplaces are better understood, supply chain professionals will undoubtedly have a much different view of the benefits of remote work, and the practice may become even more widespread.

As for insurance, likely the most important benefit for many American workers, nearly all supply chain professionals surveyed said they have access to health, dental, vision and life insurance programs subsidized by their employers. Overall, 79% of supply chain professionals say they are satisfied with their benefits.

EXPANDING OPPORTUNITIES FOR COLLEGE GRADUATES

The number of young supply chain professionals who study the field before starting their careers is on the rise. Over the past decade, an increasing number of schools have begun offering supply chain as a major, such as bachelor’s degrees in supply chain management, logistics and operations. Clearly, universities are seeing the benefits of having a supply chain program and are recruiting and retaining students to the field accordingly.

When the survey was completed, finding a supply chain job was not difficult for graduates. More than one-third of college graduates (37%) reported finding a job in the supply chain industry less than a month after graduation. Another 23% said they found a job one-to-six months after graduation. The national average for time spent securing a job after graduation, for all industries, was five months.

The relative ease of finding a job in the field also extended beyond recent graduates: One-third of all supply chain professionals said they found their current job in less than one month, an important indicator for employment opportunities for seasoned professionals in the field who want to move into management, relocate to another city or change focus within the industry.

The current recession will undoubtedly have an impact on these numbers; yet, at the same time, it has underscored the importance of supply chains and talented industry professionals.

THE CRUCIAL ROLE OF SUPPLY CHAIN

Although the world economy is currently entering a recession and unemployment in soaring, the field of supply chain is a necessary one. Whether people are able to move freely in their communities or are stuck in their homes, they still need food and other essential products provided by the supply chain. Professionals who are able to navigate these logistical puzzles are vital.

Nevertheless, as the consequences of the pandemic continue to reverberate around the economy, going forward, the availability of jobs isn’t a given. Supply chain leaders may be wondering if they should cut staff or reduce hiring in these difficult times. ASCM’s research would urge these professionals instead to turn to mentoring and training the next generation of supply chain professionals now. Despite economic uncertainty, it is an essential investment in the future of the industry. The supply chain talent gap was already well documented; without encouraging growth in the entry-level positions, the industry may undergo disastrous results in the coming years.

While the immediate future of the global economy is unknown, there will unquestionably be a demand for knowledgeable, experienced professionals. Now might be an excellent time to teach employees the technical and leadership skills that managers report looking for; offer certifications and virtual training; encourage professional development; and seek ways to build upon existing talent in order to guarantee a healthy supply chain in the future. One thing is clear: Once someone is established in the field, they are likely to be happy to stay there for a long time.

Supply Chains Struggle Amid USPS Restrictions

Fri, 28 Aug 2020 00:00:00 -0500

In an effort to reduce costs, Postmaster General Louis DeJoy has eliminated 2,900 late trips and 1,600 extra trips between mail processing facilities and local post offices, according to the bipartisan Federal News Network. A recent NPR report finds that, as a result, some trucks are leaving depots without a full load of mail — in some cases, with no mail at all.

Data from the U.S. Postal Service (USPS) shows an 8% decrease in on-time first-class mail delivery, as well as similar declines for marketing mail and periodicals. At the same time, the agency has faced serious staffing issues, with about 40,000 employees contracting COVID-19 or showing symptoms that require them to quarantine. Several dozen have died. On average, staffing has been down by about 3-4%, with many large cities functioning at 20% below normal rates.

The USPS is a vital public service and plays a critical role in America’s supply chains; for many businesses, it’s the only delivery service available. Any service interruption can mean a loss of revenue, costly refunds and serious product damage. In fact, there are numerous reports of rotting meat; spoiled fruits and flowers; and, most appallingly, thousands of baby chicks arriving dead at poultry farms. One organic farmer in Maine told Bloomberg that, in a recent shipment of 4,800 chicks, she lost every single one.

“Hatcheries typically ship the birds to farmers by USPS, the only service that allows people to send live animals,” the article explains. However, newborns can only survive 72 hours without food or water, which equals a tight delivery window.

“Nearly 20% of the top 1,000 retailers fulfill at least some of their e-commerce orders through the Postal Service,” Beth Daly writes for academic journal The Conversation. She adds that the USPS is even more important for businesses in rural or isolated areas because of its wide reach and affordable flat rates.

Daly says that, without a reliable Postal Service, small businesses may need to resort to pricier FedEx and UPS options: “Higher costs could severely hamper their ability to operate and compete.”

It’s worth noting that an overwhelming 91% of respondents have a favorable view of the USPS, higher than any other federal agency.

Please vote

Of course, the elephant in the room is the growing wariness concerning the Postal Service’s commitment to delivering a flood of mail-in ballots for the 2020 election during a global pandemic. This is largely shaped by the fact that the USPS has become a political issue, rather than a tradition that’s been part of our electoral process since the Civil War.

Critics of the recent USPS changes believe that they will directly affect mail-in balloting, which will be desperately needed as a result of COVID-19, particularly by senior citizens and other at-risk groups. The fact remains: Inhibiting people’s ability to vote by mail is a strike against the Constitution, the democratic process and equitable voting rights.

America is in crisis. We’re in the midst of a deadly pandemic, systemic racial injustice, massive unemployment rates, an unstable education system, and global warming fueling deadly fires and hurricanes. We must make our voices heard to protect our country and the precious beliefs and principles it was built upon. Please vote. And if you don’t plan to visit the polls in person, request your ballot today, and get it in the mail as soon as possible.

The Path Forward for Supply Chains

Tue, 25 Aug 2020 00:00:00 -0500

It’s always difficult see a storm when you’re in the middle of it. In the coming weeks, months and even years, we’ll start to get access to hard data and numbers about just how much the global economy has suffered, how many businesses were deemed essential or nonessential, and how many people lost their jobs during this pandemic. However, that doesn’t mean we can’t study the news as it comes in and ask ourselves some tough questions: What could we have done to better prepare? How can we learn from this to succeed in the future?

This current economic situation is far from over, but it’s never too soon to start charting a path forward. As a first step, let’s look at the current effects on supply chains and businesses. Then, we’ll think about how this disaster will change supply chains in the future.

Current effects of COVID-19

We already are able to see some drastic effects of COVID-19 on businesses and supply chains. By looking at what has happened so far in China, we can get a clearer picture of how Europe and America will be affected in the near future.

China has had a huge decrease in output, Financial Times reports. Many companies have declared force majeure, a provision that exempts companies from contractual obligations because an unforeseeable circumstances prevents them from meeting those obligations, according to CNBC. However, experts say that force majeure claims are unlikely to be honored outside of China. Instead, factories and businesses likely will be encouraged to come up with a solution to fulfill their contacts or risk losing business.

In an ideal world, both suppliers and customers will be more understanding in this tough situation and instead work together to heal the flow of the supply chain. However, these situations likely will cause some friction and complications as businesses are forced to find new suppliers or close their doors.

In the short term, this is all creating bottlenecks at many points within the supply chain. There is a lack of inventory to provide and ship. There is inventory sitting in storage at warehouses with no workers to pack it. There are retail shelves sitting empty. Consumers are canceling online orders, hoarding and panic buying. The supply chain basically looks like Los Angeles rush hour traffic. There is some good news, though: In the United Kingdom, panic buying already is decreasing. But, it still remains to be seen how long it will take the rest of the supply chain to recover.

How could we have prepared for this?

For more than a decade, experts have been advising businesses to diversify their supply chains in order to be more resilient. Spreading out your supply chain over many locations is similar to diversifying your stock portfolio. You can increase your chances that a few of your stocks will do really well. If the entire economy crashes, everyone will be feeling the negative effects, but you’ll have a higher chance of at least some of your stocks recovering after the crash. By diversifying your supply chain, you can make it more resilient to shocks to the system. If you can successfully manage your business in the meantime and take advantage of the help that is out there, you’ll have a much better chance of surviving the pandemic.

But still, it would have been hard to predict or expect an interruption this large. Nothing truly like this has happened in the recent past that we could have learned from to prepare for this. You probably can’t ever remember being forced to stay inside to stop an outbreak before now, which shows that this situation is serious.

There have been a few viral outbreaks recently that are somewhat similar, but their effects have not been as serious as those of the COVID-19 pandemic for a variety of reasons. Ebola, even with its astronomically high death rate, was difficult to pass along, and it was easy to spot someone with symptoms. H1N1 had a very low death rate and was not that different from the seasonal flu. SARS, which had a high death rate around 15%, is probably the closest comparison to the current pandemic. However, SARS did not spread nearly as easily and did not make it very far globally before dying out.
COVID-19 spreads easily and quickly and has affected people around the world.

In addition, the world is a vastly different place than it was in 2003 when SARS wreaked havoc on China. China’s gross domestic product has increased almost tenfold, and the country now is a more critical supplier of global manufacturing than it was back then.

Ultimately, this situation is unprecedented, and only time will tell if it is as rare as it seems. The idea of a global pandemic shutting down most major countries previously seemed outrageous, but the truth is, we are a more globally connected economy than ever before.

How can we prepare for the future?

This leads us back to diversification. What if, instead of having manufacturing based solely in China, a company has factories in China and Eastern Europe? In the case of the COVID-19 pandemic, the company would still be hit hard, but it would be more likely to survive. The virus spread so quickly that just as factories in China were coming up empty, the other factories began feeling the effects. But, perhaps this means that factories in China could then reopen as others are shutting down, spreading out the harm across the supply chain rather than taking the hit all at once.

However, this is a strategy that realistically only large businesses can follow. It isn’t possible for many businesses, and it would not provide great protection against harm during a time like this anyway.

So what does the future hold? Will things change or remain the same?

Honestly, things have to change. Things cannot remain the same forever, but they probably will for the foreseeable future. Why is that?

The truth is that the real solution to this problem doesn’t exist yet. We need to look to the future for bigger, better solutions that allow us to stay globally connected while mitigating risks. These areas have only just begun to be explored. The first things that come to mind are automated, contactless supply chains powered by self-driving cars and freight and drones, but that likely is just the tip of the iceberg. We don’t have the answers right now, but we have to make it a priority to find them. We need to invest heavily in researching solutions that will help us be more prepared when this happens again.

Gauge Where Your Supply Chain Stands to Protect Its Future

Fri, 21 Aug 2020 00:00:00 -0500

With billions of COVID-19 vaccines desperately needed, any issues related to distribution and logistics issues will be problematic, if not life-threatening. Yet, according to the International Air Transport Association, 25% of vaccines are spoiled before arriving at their destination as a result of poor shipping procedures. Currently, losses from vaccines that have been exposed to temperatures outside the proper limits equal about $34.1 billion every year.

“The cold chain needs to be prepared for the onslaught of vaccines shipping around the world,” writes Deborah Abrams Kaplan for Supply Chain Dive. “It’s not an easy task, given the number of transfer points from manufacturing to administration sites.” She adds that, while the exact specifications of any impending COVID-19 vaccine are not yet known, every vaccine is a cold chain product.

Clearly, the logistics companies that will ultimately take on transportation responsibility have a lot of work ahead of them. Now is the time to invest in digital tools and technologies, particularly tracking and monitoring sensors for pallets, cases and units that can provide real-time temperature tracking data.

“Without sensors, there’s no understanding of what happens to the temperature once the pharmaceutical materials leave the labs or manufacturing facilities,” Kaplan notes. “Traditional data logger technology collects data, but by the time someone looks at it, it may be too late.”

Measuring maturity

The pandemic has underscored the need for organizations of all kinds to invest in supply chain capabilities and related technologies. Future success is inexorably linked to a company’s ability to perform and advance — especially in times of disruption.

As industry professionals strive to maintain robust, agile networks as they emerge from COVID-19, being able to measure current capabilities as well as limitations is more essential than ever before. With this in mind, ASCM has officially launched a free, cloud-based supply chain maturity model. The assessment uses compelling data visualization to drive ongoing improvements, organize and prioritize changes, identify constraints as they emerge, and advance overall supply chain performance. The maturity model also teaches team members how to plan and collaborate more effectively with partner organizations for sustainable results.

Notably, the solution is based on ASCM’s game-changing Global Health Supply Chain Maturity Model (GHSC MM), which is generously funded by a three-year grant from the Bill & Melinda Gates Foundation. Currently in action in Kenya, Nigeria and Senegal, 136 facilitators have been trained so far to help with assessments at the regional, sub-regional and national levels.

With these qualified facilitators in place, 233 assessments have been conducted in 32 African countries to date. The scope of assessment includes national central medical stores, regional supply chains and specific site evaluations. The result is greater visibility into the availability of vaccines, essential medicines and related supplies across the national health system. Importantly, the GHSC MM is also being used to advance African health care supply chains’ response to COVID-19. This will bring about improved access to life-saving products and better outcomes overall.

The GHSC MM provides a road map to supply chain gaps and opportunities for improvement, whether in a developing region or an established market. Maturity models are based on the premise that achieving overall supply chain excellence requires many, small steps of continuous improvement. Take your first step today with the free Maturity Model assessment.

ASCM Global Standards Enable Intel To Make an Impact

Tue, 18 Aug 2020 00:00:00 -0500

As global supply chains become increasingly complex, more risks are introduced into operations. These potential hazards are often exceptionally difficult to identify, particularly in the high-tech industry. The Santa Clara, Calif.-based Intel Corporation has been an advocate of corporate risk assessments for years and is an active member of the Responsible Business Alliance (RBA), a coalition dedicated to corporate social responsibility in global supply chains. Intel regularly reviews and measures its performance through risk assessments and audits — some of which are conducted by third parties — and then publicly shares the results in order to support supply chain transparency.

Assessments of its own manufacturing sites usually show that risks are low overall, thanks to the company’s focus on mitigation. Nevertheless, rather than just avoiding potential problems, Intel leaders choose to be proactive by driving positive and lasting change.

“We need to be intentional in how we approach improving our supply chain,” explains Jocelyn Cascio, manager of supply chain responsibility at Intel. “While it would be easier to identify the sources of risk in our supply chain and simply eliminate them, we have learned this could cause de-facto embargoes on areas of high risk and hurt the people who depend on these supply chains. Instead, we work to identify areas of risk and develop mitigation strategies that improve the livelihoods of our supply chain actors.”

For more than a decade, Intel has been diligently leading change in major risk areas through its Supply Chain Sustainability program. Most recently, leaders have been focused on conflict minerals, modern-day slavery and human trafficking, while expanding their supply chain diversity in order to foster innovation.

RESPONSIBLE SOURCING

As a cofounder of the Responsible Minerals Initiative, Intel helped establish a smelter audit protocol, which serves as a cross-industry open standard for companies to validate that tin, tungsten, gold and tantalum sourced from the Democratic Republic of Congo come from mines free of armed conflict. “This protocol leverages radio-frequency identification technology and a bagging-and-tagging scheme to ensure that the sourcing of these minerals does not contribute to the egregious human rights violations,” Cascio says.

ASCM global standards and APICS learning and development programs have been critical to Intel’s success. “Our supply chain is one of our biggest competitive advantages,” says Andreina Hines, responsible minerals program manager. “Things can get extremely complex, so it is crucial that we understand how other supply chains that affect ours operate. APICS education provides us with this knowledge and helps us interact more effectively with internal and external supply chain partners.”

The APICS body of knowledge enabled Intel to map its entire supply chain, from mineral refineries to final product, in order to ensure responsible sourcing. “Intel has been working hard to achieve a responsible supply chain and manufacture products that improve the livelihoods of the people who participate in making it possible,” Cascio explains. “Understanding how our supply chain affects the world is crucial in making this possible.”

LABOR RIGHTS

According to the International Labour Organization, about 25 million people around the world are victims of forced labor. Of these, 16 million are exploited in the private sector, and about 4 million are forced into labor by state authorities. In addition, about one-quarter of modern slavery victims are children, and women are disproportionally affected, making up nearly 60% of the forced labor population. When this issue made the news back in 2014, Intel leaders realized this was an area where they could effect change. “We developed a plan for our own supply chain, influenced the industry coalition and persuaded other technology companies to join us,” Cascio explains.

Since then, Intel leaders have continually worked with suppliers to identify root causes of forced or bonded labor and ensure resolution. Some of the resulting solutions have included improved employment contracts, better living conditions, returned passports to victims of forced labor and repayment of more than $14 million in fees by suppliers to about 6,300 workers. More than 35,000 migrant workers have been positively affected.

Some of the interventions stem from Intel’s supply chain corporate social responsibility leadership program, known as SPARC. Initially, the program focused on driving suppliers, audits and risk assessments to meet an industry standard code of conduct, created in part by Intel. The program later expanded to include resources to help suppliers improve labor, health, safety, environmental, ethics and management systems competencies. These resources include no-cost supplier conferences; third-party consulting; industry training events; webinars; and an online Supplier Sustainability Resource Center, which offers information about 19 critical topics, such as working hours laws and regulations.

SPARC originally was intended to help Intel’s top 100 suppliers, but the program has expanded to include more than 350 of the company’s most critical technology, product and service suppliers, which account for more than 60% of Intel’s spending.

Intel also cofounded the multi-industry, multi- stakeholder Responsible Labor Initiative, which is focused on ensuring that the rights of vulnerable workers consistently are respected and promoted. Furthermore, the company is using its technology in partnership with the National Center for Missing & Exploited Children to battle human trafficking. “We bring together artificial intelligence, deep learning and enterprise data management to accelerate the identification and location of missing children to ensure their safe return,” Cascio says.

EMBRACING DIVERSITY

ASCM products and services and the APICS body of knowledge have been especially useful in setting up and supporting Intel’s Supplier Diversity and Inclusion program. In 2015, Intel’s CEO committed to spend $300 million to improve its diversity; launch a $125 million capital investment fund for diverse business; and, by the end of this year, spend $1 billion annually with diverse-owned companies throughout its supply chain.

As company leaders developed the program, they came to realize that it would be difficult to reach these ambitious goals without help from suppliers. “The foundational knowledge provided by APICS was essential for understanding the spectrum of suppliers’ motivations and influencing them to join the effort,” Cascio says. “We were truly astonished by the positive response of our supplier base and the ripple effect of this program expansion that is helping transform the entire industry.”

Intel requires its nondiverse tier-one suppliers to report any spending with diverse tier-two suppliers in relation to Intel work. This effort has resulted in 150 nondiverse suppliers reporting direct or indirect diverse supplier spending in 2018.

In addition, the company hosts workshops to connect its procurement team with diverse entrepreneurs, programs to help small companies expand and scale their businesses, and educational efforts with governments and nongovernmental organizations to establish supplier diversity in countries where it was not previously recognized.

The company also has embedded supplier diversity into its own processes so that it becomes a long-term business practice. Cascio notes that this is particularly challenging in the technology industry, but the company is seeing greater innovation as a result of inclusive sourcing. It currently has active supplier diversity programs in 18 countries, which puts the company on target to meet its $1 billion goal.

PLANNING AHEAD

Company leaders are continuing to develop and expand programs to stay ahead of risks in the supply chain. They regularly engage with external stakeholders to solicit input, expertise and perspectives about current and future challenges.

“We must accelerate the responsibility of our supply base and help our suppliers increase their understanding of the value of corporate responsibility,” Cascio says. “Our journey moves onward.”

A Potential Logistics-Retail Junction

Fri, 14 Aug 2020 00:00:00 -0500

Since the beginning of 2020, nearly 4,000 companies have filed for bankruptcy. In June, more than 600 filed, up 43% from last year. Experts predict that 2020 will easily set a record for mega-bankruptcies — filings by companies that are $1 billion or more in debt. And the number of companies filing that are at least $100 million in debt will challenge records from the Great Recession.

There have been numerous household names among the businesses that are closing or restructuring, including J.Crew; Neiman Marcus; J.C. Penney; Lucky Brand; Brooks Brothers; Sur La Table; and even America’s oldest department store, Lord & Taylor. In addition to sharing the unfortunate designation of being a COVID-19 retail casualty, these companies have something else in common: Each is a shopping mall store. Which begs the question — what will happen to all that empty space?

According to The Wall Street Journal, the possibility of a series of acquisitions by Amazon associates provides a clue: “Simon Property Group Inc. has been exploring with Amazon the possibility of turning some of the property owner’s anchor department stores into Amazon distribution hubs. … The talks reflect the intersection of two trends that predate the pandemic but have been accelerated by it: the decline of malls and the boom in e-commerce.”

While malls were forced to temporarily close and limit crowds even after reopening, Amazon overcame COVID-19’s logistical challenges to yield its biggest quarter ever. A deal with Simon would be consistent with the e-commerce giant’s plans to accelerate the last mile by increasing the number of distribution facilities near residential areas.

“Amazon needs more locations to capture same-day sales,” says Patrick Penfield, assistant professor of supply chain practice at Syracuse University’s Whitman School of Management. “Placing mini distribution centers into existing malls would allow them to decrease their delivery times further and capture even more online sales, especially with perishables items such as groceries.”

Although granting space to Amazon goes against Simon’s longtime foot-traffic-based business model, Penfield notes that this would also be an outstanding opportunity for mall owners to stop the “retail lease space hemorrhaging” and stay in business.

The Journal story goes on to say that, in addition to warehousing, many mall owners are considering leasing to schools, medical offices and senior living facilities. “With the current pandemic, industrial is the only thing left now,” says Camille Renshaw, CEO of real-estate investment brokerage firm B+E.

Dynamic fulfillment

Those in the warehousing and logistics field have had quite a challenging year, to say the least. In an effort to ease the pressure, the ASCM CONNECT virtual conference will feature a dynamic fulfillment learning path specifically designed to help industry professionals optimize their supply chain organization’s logistics and distribution efforts. You’ll come away with a deep understanding of the concepts and processes that improve the movement of goods and materials. Register today to begin the journey.

Then, continue advancing your proficiency with the APICS Certified in Logistics, Transportation and Distribution (CLTD) designation. The APICS CLTD program gives you everything you need to demonstrate in-depth expertise of key concepts in order to streamline operations, boost your organization’s bottom line and set you apart from your peers. See what CLTD can do for your career and organization.

COVID-19 Accelerates Technological Change

Wed, 12 Aug 2020 00:00:00 -0500

Demand for change in the global supply chain is not new. The ongoing trade war between the United States and China already has prompted businesses in the United States to diversify their supplier bases away from China. A recent report by global consultancy Kearney estimates that, as a result of diversification, manufacturing import ratios between the two countries have been pushed to 98% in 2019 — an unprecedented level — and up from -32% the year before. A positive figure indicates net reshoring, and a negative figure indicates an increase in offshoring.

But other factors are driving change too, including the desire to mitigate disruption risk generally, cost savings, greater output agility and closer proximity to centers of demand. COVID-19 has only served to further expose the frailty of global supply chains and turbocharge demand for change. A recent ongoing survey of 50 chief financial officers from Fortune 1,000 companies found that one-third of the companies listed supply chain issues as a top-three concern for dangers facing their businesses.

The needed changes take time and ultimately will rely on technology innovation and implementation, often through the acquisition of technology disruptors by established industry players. Let’s take a look at some of the technology that has a potential to resolve some of the latest supply chain challenges.

Warehouse automation

Just-in-time delivery has been adopted as an effective way to maintain optimum production while also reducing costs. The pandemic has exposed this as a weak link, however, because the practice relies on manual workers.

To address this vulnerability, there is an added drive toward automation. Warehouse management systems matched with developments in artificial intelligence (AI), for example, are helping to optimize warehouse functionality and distribution while also reducing the number of employees required. Even before this year’s coronavirus outbreak, research firm Markets & Markets expected the warehouse systems market to explode to $4.82 billion by 2024, up from $2.06 billion in 2018.

Robotics is another rapidly growing industry, especially now that robots are more affordable and offer longer lifespans. The robotics industry is transforming not just the manufacturing of goods but also their management and distribution. The use of robotics in warehouse management for the movement of goods already is common. Research firm Facts and Factors predicts that the global autonomous forklifts market alone will reach a value of around $10.5 billion by 2025, up from $6.5 billion in 2018.

Autonomous distribution

Advancements in drone and vehicle technology also are enabling businesses to bolster resilience and reduce their dependency on manual labor by automating the distribution of goods from the warehouse to the consumer.

An ARK Investment Management study estimates that parcel drones have the capacity to deliver packages profitably in less than 30 minutes for as little as $0.25, compared with more than $7 for traditional domestic shipping. The study also estimates that, as a result of frictionless and inexpensive delivery, consumers are likely to purchase significantly more goods online, growing e-commerce’s share of retail sales from 14% in 2019 to an estimated 60% in 2030, with drones delivering more than half of the e-commerce volume.

Experts anticipate that most aspects of the supply network will be automated within the next 15-20 years. Autonomous robots will collect goods from the factory and move them to an automated distribution facility. An autonomous vehicle or drone will then collect these goods and deliver them autonomously to their destinations. The low cost of drone delivery also provides manufacturers with the ability to begin circumventing the warehouse entirely and deliver goods directly from the factory to the customer’s door, thus cutting out a key element of the traditional supply chain completely.

3D printing

Perhaps more than any other area, 3D printing’s rapid expansion is revolutionizing the manufacturing and production of goods. Because of its reduced labor costs, 3D printing offers producers greater capacity to make goods cheaply, efficiently and much closer to market. The implications are seismic. They represent the prospect of major service-led economies, such as the United Kingdom, United States and Canada, reclaiming their manufacturing base. The industry already is booming. Last year, the global additive manufacturing market grew to more than $10 billion for the first time, according to Interesting Engineering.

Autonomous shipping

Together, 3D printing and drone technology will begin to have a significant impact on the global maritime cargo industry within the next decade. 3D printing will reduce both supply lines and the demand for long-distance maritime shipping. In the longer term, advances in autonomous cargo drone technology are likely to compete with short- and medium-range maritime freight in terms of cost.

To adapt, the maritime cargo industry will need to embrace innovation to reduce costs and bolster resilience. Even before the pandemic, investment in the autonomous shipping market was expected to grow from $90 billion today to more than $130 billion by 2030, according to Ship Technology. The coronavirus pandemic is likely to trigger an acceleration in that investment. At present, autonomous ships are little more than automated robots, but developments in AI offer the capacity for enhanced decision-making and greater efficiency.

Innovation ahead

COVID-19 represents the greatest single short-term disruption to the global economy since World War II. History teaches us that times of crisis often drive innovation. This pandemic is no different.

Technological innovation to redraw the global supply chain already was underway. This crisis has simply led to an acceleration in that rate of change. The challenge now falls on industry to embrace and adapt to it.

Education and Well-Being Must Be Basic Rights

Fri, 07 Aug 2020 00:00:00 -0500

“Kids are hurting right now. I don’t need a politician to tell me that,” writes Superintendent Jeff Gregorich in a poignant and entirely authentic Washington Post article about his ongoing deliberations over whether his district should reopen or not. “School is the best place for them. We all agree on that. But … there’s no way it can be safe. If you think anything else, I’m sorry, but it’s a fantasy.”

Gregorich’s words echo my own feelings, as I struggle with the decision to send my son back to the University of Iowa. As I’m sure all parents of school-aged children understand, that choice was one of the most difficult my family has ever had to make. And it’s not just parents and students; teachers are scared, too. We’re going to lose way too many qualified educators because they’re choosing retirement or a career change over being forced back into the classroom too early. In fact, a USA Today/Ipsos poll found that one in five teachers are unlikely to go back if schools open in the fall.

As nations around the world grapple with how to educate students during a pandemic, another recent study finds that any plan to reopen schools “must be accompanied by large-scale, population-wide testing of symptomatic individuals and effective tracing of their contacts.” Furthermore, 75% of individuals with symptomatic infection would need to be tested and positive cases isolated; plus, 68% of their contacts would have to be traced so that they can also be tested and quarantined, if necessary.

Yale Public Health Professor A. David Paltiel tells CNN that numerous schools will be unable to reach this high bar: “If you can’t see your way toward at least minimal meeting of these screening standards or maintaining control over prevention, then a school really needs to ask itself if it has any business reopening.”

Share what you can

When you consider the vastness of COVID-19, it’s difficult to envision any school operating without ongoing closings and openings, as well as students and teachers in and out of quarantine. This, of course, raises critical questions about the quality of education that can possibly be provided under such extreme circumstances.

In an effort to address those questions, some schools have decided to fully reopen, but many more are going virtual or adopting an in-person/virtual hybrid. (And, like Superintendent Jeff Gregorich, others continue to contemplate the best choice between three very discouraging alternatives.) But one thing is clear: Administrators and teachers will be looking to technology to help them prepare for all of the possible scenarios — and the future of education.

As anyone in our industry knows, supply chain continues to face a talent shortage. Here at ASCM, we talk constantly about the importance of sharing what we do with kids, inspiring college students to pursue supply chain majors and supporting our young professionals as they begin their supply chain journeys. This is a pivotal moment: We must defend and safeguard those who represent the future of supply chain and the people who educate them.

Technology can help make this happen. For our part, ASCM has transitioned our annual Case Competition to an entirely virtual format for 2020-21. Organized in collaboration with Deloitte, the ASCM Case Competition inspires future industry leaders by giving student teams the opportunity to enhance and test their knowledge with real-life supply chain challenges.

In addition, our online Mentoring Program is a wonderful way to reach today’s students as they navigate an extraordinarily challenging landscape. You can make a real difference by giving your time and talents to a future supply chain professional.

Anything we can do right now to help young people is an essential investment in our most valuable resource. Please get involved today.

Five Lessons from a Crisis

Wed, 05 Aug 2020 00:00:00 -0500

The global community has lived through some truly unbelievable events this year. It all began with a new strain of a deadly virus that most of us had never even heard of. This quickly expanded into hysteria purchasing, empty store shelves, and a bullwhip effect that caused disarray as suppliers and logistics partners contended with unforeseen demand. Meanwhile, we experienced prolonged periods of isolation, with many people having to figure out how to work remotely — if they were lucky enough to have a job that they could perform from the safety of their homes. Essential workers, on the other hand, put their health on the line to perform tasks that too often are taken for granted. Finally, astonishing levels of unemployment and the worst global economy since the Great Depression marked the COVID-19 pandemic as one of the most significant disasters of our time.

All of this disruption has been a critical wake-up call for global supply chain professionals: “The business world’s approach to sourcing and supply is not fit-for-purpose,” says Omera Kahn, a supply chain professor and risk expert. “Manufacturers, retailers and logistics service providers must all start doing things differently.”

It is unfortunate that a global disaster was required for us to get here, but we now have a precious opportunity to emerge better than we were before. The new approaches we discovered during the pandemic must be maximized in order to deliver outcomes efficiently, sustainably and with greater resilience. Following are some strategies for how to start rebuilding for the greater good.

1. RISK AWARENESS

A global pandemic is something that, thankfully, doesn’t happen often, but it’s still essential for supply chains to enact risk mitigation, avoidance and prevention plans to prepare for whatever the next crisis may be. This begins with frequently assessing and strengthening networks and building risk awareness into operations.

Tom Melina, senior vice president of supply chain at maintenance, repair and overhaul solution provider Synovos, discusses risk awareness with clients regularly. “The specific techniques used to mitigate risk might vary by industry and location,” he says, “but reviewing supplier financial assessments, building backup sources of supply and initiating strong supplier relationship management are essential.”

During the worst of the outbreak, it proved valuable to establish collaborative teams, including supply chain partners, to improve real-time communication. Additional positive measures included investing in business continuity planning and conducting a risk exposure, vulnerability and resilience exercise to analyze the potential for risk, as well as the means to recover. Finally, acquiring insurance to protect against business interruption or trade disruption was key.

John M. Donnelly, purchasing manager at Globe Food Equipment, believes the immensity of the current situation could not have been anticipated. However, through communication with suppliers in China, Donnelly’s team was able to better understand what was going on at the outset of the disaster and collaborate with sister companies to resolve issues.

As the pandemic evolved, Donnelly says he continually reached out to his suppliers in order to determine the financial and personnel impacts at their companies, as well as any other challenges they were facing. In addition, he was open with them about the fact that his business was affected and production would be lower. “When suppliers understand this, they can adjust their plans accordingly,” he says. “With communication, people are able to make decisions based on data and facts and not be second-guessing supplier situations.”

2. PEOPLE FIRST

In addition to upstream relationship management, COVID-19 has accentuated the importance of cultivating positive relationships with staff through leadership, open discussion, information sharing, and training and education. “Effective teams are made up of groups of people who know the value of collaboration and sharing responsibility, accountability and flexibility,” says Ann Gatewood, CPIM-F, CIRM, CSCP-F, CLTD-F, president of Gatewood Associates. “Promoting communication must be high on the list of the team lead in order to deal with issues as they occur, rather than waiting until a crisis demands it.”

She believes the “distancing economy” enabled supply chain organizations to identify strengths and weaknesses; find inventive ways to restructure processes going forward; and take advantage of new, more creative ways of doing business.

Importantly, the supply chain community also learned how critical it is to maintain regular contact with employees, put in place necessary safety protocols, and let workers know that company executives care about their well-being. After all, it is people who form the foundation of the business and who will ultimately get it back on track.

“The starting point needs to be what impact this is having on people, not on the bottom line,” Kahn advises. “Trust will naturally come when a leader says, ‘I am thinking about each and every one of you and the impact this is having on you.’ That then builds trust, which motivates people to do a good job, even if they’re working from home.”

As an example, Donnelly says Globe Food Equipment demonstrated the importance of employee well-being by making sure hand sanitizer was available to all employees, mandating that temperatures be taken upon entering the facility and twice daily, reducing travel between buildings, and maintaining personal space between workstations.

Finally, relationship-building with customers was also an important part of navigating the pandemic. “Customer service, in all of its manifestations, is a paramount goal,” says Ananth V. Iyer, department head and senior associate dean at Purdue University’s Krannert School of Management. “The goodwill it engenders pays significant dividends during recovery.”

3. TRANSPARENCY WITH DIGITAL TOOLS

Back in April — as food banks saw record demand and many grocery stores shelves were still empty — the world was shocked to see farmers sending millions of gallons of milk down the drain, cracking eggs rather than letting them grow into chickens and plowing fresh produce back into the fields. This wasted food, originally destined for restaurants, school cafeterias, hotels, stadiums and theme parks, made it painfully clear that far too many supply chains struggle with coordination and communication.

Digital tools help supply chains initiate and develop synchronization, proactive supplier management with a longer-term focus, better demand planning, and more effective management of critical inventory.

“The pandemic drove much greater adoption of a digital supply chain,” Melina says. “Companies already using the technology were still able to function as a result and will likely be among those bouncing back the quickest once things settle down again.” He points to functions such as catalogs and automated ordering as the types of the solutions that will likely gain the most traction.

One of the most advantageous digital solutions turned out to be supply chain control towers, which enable organizations to react to and correct issues as they arise. Visibility from dashboards; analytics from simulations, what-if scenarios and risk analysis; and ongoing monitoring make it possible to clearly see whether all parts in a network are moving in concert and performing as expected.

Furthermore, digital twins proved beneficial: “Given that the real-world environment has many versions of truth floating around at any time, there needs to be room for multiple versions of every parameter with associated probabilities,” Iyer says. “A simulated world where ideas can be tested enabled scenario planning and the ability to test for resilience.”

Digital tools that maximize data — such as machine learning and blockchain — were invaluable. According to GS1 global, a nonprofit information standards organization, blockchain is useful in supply chain for “food and drug traceability, product sourcing transparency and order-to-cash process automation in retail.” In particular, it shows chain of custody for physical, digital and health reasons. Machine learning, combined with human insight and modification, helped organizations develop algorithms that predict behaviors, plan scenarios for a range of outcomes, improve forecast accuracy, identify potential risk and offer solutions.

Finally, 3D printing enabled some companies to adjust to shocks by shifting to local production to provide supply. Plus, many manufacturers used the technology to quickly pivot production to make urgently needed items, such as face shields, lung simulators, ear guards and more.

4. AGILITY AND RESILIENCE

By providing better visibility into complex networks and enabling swift experimentation of risk mitigation and recovery plans, digital supply chains also helped professionals achieve agility and resilience. “Companies learned that they need to better understand their capabilities and develop better planning, monitoring and response strategies — with agility as the watchword,” Kahn says, adding that demand planning should place agility ahead of accuracy, while sourcing should place agility ahead of cost.

Notably, many supply chain organizations discovered innovative ways to create shared value with stakeholders and even collaborate with competitors. “During COVID-19, people came together as communities; they helped each other,” Kahn adds. “I think supply chains are very much like that, as well: Why not share our distribution space? Why not share our people? Forty years ago, it was very transaction-oriented, but it’s become a lot more like a community.”

As dynamics changed, pre-planning was repeatedly offset by decisions made by local, state and federal governments. As a result, being able to quickly adapt to conditions was once again vital. Melina says one tactic implemented by Synovos’s team was working with clients to produce much longer timelines than they were accustomed to. Although they did not recommend clients increase maximum inventory levels, they did work to determine where supply will come from and develop contingencies. He adds that the most successful organizations were those that had a flexible supply chain that could identify secondary sources of supply creatively.

Donnelly agrees. He cites imagination and ingenuity in finding resourceful ways to service customers, the ability to innovate methods for modifying current processes to make a totally different product, and approaches taken by workers to be productive outside the workplace as positive effects of the crisis. In addition, his company was able to continue production by having employees take on multiple new job functions; Globe Food Equipment executives even took over cutting the grass to save money on lawn services.

“Reducing costs has been very interesting,” Donnelly says. “We looked at things like dumpster pickups and lowered the frequency. We decreased freight by combining deliveries on one carrier instead of each shipment being handled separately. It isn't a lot of money, but several small savings can equal one large one.”

Meanwhile, one truly massive shift was the amount of demand moving to online channels. Those companies that were able to maintain an integrated view of inventory, and segment or separate it for online versus retail, were better positioned to succeed. The pandemic also taught us the importance of having the capacity to handle the volume coming into distribution centers, as well as the last mile — and the agility and resilience necessary to shift resources to online offerings quickly.

“This pandemic was a reminder that every business should put an emphasis on strengthening its supply chains so they can operate as seamlessly as possible through any situation,” says Ryan Hunter, vice president of global customers for DHL Express Americas. “As many retail brick-and-mortar stores remained closed, shoppers were dependent on e-commerce businesses with strong supply chains more than ever — especially in categories such as consumer product goods, grocery and staple items.”

Hunter also stresses the importance of looking beyond COVID-19 toward the future, now that more consumers are accustomed to relying on e-commerce for their shopping needs. “The comfort level with online shopping has increased, and expectations are higher than ever,” he says. “The digital supply chain side of the retail business must be stepped up to retain customer loyalty.”

5. ETHICAL AND SUSTAINABLE BUSINESS MODELS

Supply chain organizations have become more cognizant of the health and safety of their work environments. Additionally, concerns over cost containment have caused a greater focus on repair, reuse and refurbishment in order to extend product life cycles.

“It is not clear where we will go from here, but if customers demand more sustainable processes, businesses will respond,” Iyer says. “Customers never knew about the supply chain discipline and how vital it is, how many companies are involved, and how intensely the physical and digital world are linked.”

He adds that the pandemic was a unique opportunity to educate people on what it takes to get products to them and how much planning goes into making toilet paper and eggs readily available.

Perhaps the most significant takeaway from COVID-19 is this: Supply chain — which not too long ago fought for a spot at the boardroom table — has become commonplace at the kitchen table. As the spotlight shines on our industry, the entire world is beginning to understand the impact of supply chains on their lives. Hopefully, businesses will take this opportunity to review their key focus areas and, ultimately, choose to prioritize people and the planet.

The pandemic disrupted every business model that was built on the concept of profit and clarified that it’s “time for a U-turn,” Kahn says, noting that today’s greatest design principals are those that are better for the entire world ecosystem. “We are rewiring our thinking to be a lot more proactive and resilient while taking another look at the definition of wealth,” she says. “Is it how much money we take in our pockets each day, or is it the wealth of collective efforts doing something for the benefit of all?”

Rapid Responsiveness in CPG

Fri, 31 Jul 2020 00:00:00 -0500

The magnitude of disruption that supply chains have had to surmount in 2020 is unlike anything we’ve seen before. COVID-19 has altered perspectives across all industries, with health care organizations perhaps experiencing the most critical, ongoing vulnerabilities. For those in consumer packaged goods (CPG), supply chain optimization continues to be a priority, as more people eat at home and producers struggle to keep goods on grocery store shelves.

For one, General Mills is working to meet the heightened demand by relying on 20% more third-party providers. The CPG giant has expanded existing partnerships and initiated numerous new ones with both contract manufacturers and raw materials suppliers. Chief Finance Officer Kofi Bruce told The Wall Street Journal that the decision was made back in March, when “demand started to soar.” He also noted that General Mills’ existing relationships made it easier to find partners that could quickly ramp up production.

The article explains that vetting a potential partner begins with assessing its financial viability and the quality of its facility and products. Each contractor should have capabilities to put food into a box or process products so that they can run a soup or cereal packaging line, for example. The evaluation also involves General Mills asking the prospective partner to make samples of its products and conducting a laboratory analysis of each. Once selected, General Mills integrates the new partner into its supply chain by setting it up as a supply location and making sure it receives materials automatically.

Although the strategy to engage third parties means lower profit margins for General Mills, the company believes it will be well worth it in order to preserve precious grocery shelf real estate: “It will cost us more to operate in this environment,” Bruce said. “But these are the things that are necessary for us to be agile and nimble and prepared to deal with a longer period of sustained higher demand.”

So far, the plan is working: According to the article, “The company reported a 16% increase in comparable sales for the most recent quarter ended May 31. Its U.S. cereal sales, which were on the rebound even before the pandemic, climbed 26%.”

Succeeding together

As the General Mills story illustrates, the ability to recognize and resolve supply chain gaps while mitigating risk is a key competitive differentiator. This and other lessons from these difficult past few months underpin the ASCM tenets of strong collaboration and teamwork among businesses, the people who work for them and those in the extended enterprise. This objective has everything to do with successful risk mitigation, reliable performance and sustainable business.

Only when we work together can we create a common strategy and truly align resources for the greater good. As the supply chain landscape continues to present challenges, ASCM is dedicated to addressing market needs with industry-leading education and training, products, partnerships, and information designed to help us all rebuild a better world through supply chain.

Omnichannel and the Storehouses of the Future

Wed, 29 Jul 2020 00:00:00 -0500

Back in 2008, during the Great Recession, the toll of a retail apocalypse began to sound. The expectation was that e-commerce would kill the brick-and-mortar store. It was a common refrain for several years, but it turned out to be an inaccurate prediction. It is true that many retailers declared bankruptcy and shuttered their businesses; likewise, many nations were over-stored and rationalization was needed. However, thanks to the rise of e-commerce, more retailers were actually opening stores than closing them.

The retailers in the best position to capitalize on this shift were those that had already established brick-and-mortar locations, which could modify for omnichannel operations swiftly. They achieved this by gaining one view of inventory (and one view of the consumer) across the enterprise. In fact, omnichannel shoppers have been shown to be more profitable than single-channel shoppers.

But getting fulfillment right in an omnichannel environment profitably is difficult. Some retailers are still tackling the basics. Effective fulfillment that does not eat up profits requires digital transformation — the ability to automate data, integrate that data across platforms, gain visibility into that data, and be able to analyze and make decisions in real time. Furthermore, infrastructure and processes — when combined with the analysis enabled by digital transformation — permit the optimal combination of inventory and labor, location, shipping time, cost and delivery to ensure customer delight and bottom-line profitability.

The current global crisis has put a whole new set of strains on supply chain and forever altered retail. Over time, some shopping behaviors and patterns will return to some semblance of normal. But the pandemic is accelerating and changing the adoption of business models, such as fulfill-from-store, that were already evolving and will likely leave some retailers in a better position to navigate new retail landscapes.

As many non-essential brick-and-mortar stores closed, inventory — some of which was perishable — sat idle and unsold. Meanwhile, warehouses and fulfillment centers, often operating with skeleton crews, were not equipped to keep product moving swiftly. This state of affairs prompted many retailers to quickly convert their dark, unoccupied stores to mini fulfillment centers to keep up with orders and keep inventory moving. Others added curbside delivery. These are smart moves and prime examples of how brick-and-mortar offers key competitive advantages that e-commerce-only retailers cannot access.

Consumers are clamoring for more fulfillment options. IDC surveyed more than 1,500 U.S. residents to see how COVID-19 is changing their shopping habits and other behaviors. We found that 27% of consumers were not offered all of the fulfillment options they wanted. In addition, 61% of respondents ages 18-24 preferred to buy online and pick up in store over home delivery. Of those in the same age cohort, 29% wanted curbside delivery but did not receive that option.

As increasing numbers of retailers step up to offer more channels, customers will grow accustomed to this service and will continue to want these options, regardless of current events, but especially during periods of social distancing. Those retailers that gain the ability to ship from a location close to the consumer will enjoy lower shipping costs and faster deliveries. Curbside delivery offers yet another option for customers to receive what they want quickly, while maintaining social distance, and for retailers to minimize fulfillment costs.

To be effective in these endeavors, retailers must implement and integrate order management systems, in-store fulfillment, and other digitally enabled systems. When asked how likely it is that a digitally native competitor (one whose business model is based on digital competencies) could emerge in their industry and gain a competitive advantage, 47% of retailers responded that this had already happened or was highly likely within the next year. Is your business on the winning side of that equation?

The pandemic has inspired many supply chains to quickly pivot and adapt to new realities. It is pushing retailers to develop new practices that will turn out to be smart business models in the long term. Just be sure you are equipped to handle them efficiently and intelligently.

Living in the Moment

Mon, 27 Jul 2020 00:00:00 -0500

When 2020 began, no one could have imagined how vastly different the world would look by summer: face masks in public places; families taking part in a widespread experiment in remote learning; technological devices evolving from tools into social lifelines; and the terms quarantine, essential worker and social distancing becoming part of the global lexicon.

I have written at length about the ways in which this pandemic has affected supply chains, with a view to learning from these experiences. So, to complement that, here are some of my personal discoveries — which I hope will endure as we get to a place that at least borders on normal.

Bonding over good work. I am no longer one of only a handful of remote employees at ASCM. Seeing my colleagues’ faces every day makes me feel more connected to, and proud of, the important work we’re doing at a time when effective supply chains are so critical.

Reimagining meals. To avoid unnecessary trips to the grocery store, I’m looking to the fridge and pantry for culinary inspiration. In so doing, I’ve become a more creative cook while cutting down on food waste.

Walking instead of driving. I only venture out in my car when absolutely necessary, and I’ve learned that walking is much more rewarding anyway. It’s healthier for me (love the Fitbit step-goal celebrations), my dogs are excellent company, and it’s much better for the planet.

Being intentional about friend-and-family time. Scheduling online cocktail hours with friends or FaceTiming my parents just to catch up has highlighted the value of the people in my life who form my inner circle, and I’m so grateful for them.

Connecting and communicating with my husband. Living in close quarters with a professional trombonist fills my life with beautiful music — but sometimes my cup runneth over. We made a rule: Any moment of friction must be immediately followed by a moment of appreciation.

Valuing quality time with my kids. With one daughter in college and the other about to graduate high school, I am soaking up the hours spent in friendly competition over a board game, on the walking trails or gathered by the fire pit at the end of the day.

Realizing my closet is well-stocked. With clothing stores closed, I haven’t been tempted to buy anything new, and I’ve found I have plenty already. This is saving me money — plus, I’m not adding to the tons of clothing already in landfills.

Reawakening my inner child. Over the past few months, my family members have grown fruits and vegetables; painted jars, broken records and decks of old playing cards; built a magical twinkle-light photo display; had dance parties; and lots more. Recapturing the feeling of childlike excitement has definitely been a highlight of our time in quarantine.

Remembering how lucky I am. So many people are suffering right now, and so many others are putting themselves on the line for the rest of us. I have been doing my part to help by donating to the Red Cross and purchasing gifts card to support local businesses, but I know that I am incredibly fortunate to have a healthy family and a job that I can do from the safety of my home.

Celebrating the present. As travel plans and events were abruptly canceled, and stay-home orders repeatedly extended, the concept of looking forward to the future became an exercise in disappointment. So, I am choosing to focus on right now, confident that the sacrifices we all make today will create a safer, stronger and more united global community tomorrow.

Making Ripples in the Sustainability Pond

Fri, 24 Jul 2020 00:00:00 -0500

A recent tweet from Apple CEO Tim Cook states: “By 2030, Apple’s entire business will be carbon neutral — from supply chain to the power you use in every device we make. The planet we share can’t wait, and we want to be a ripple in the pond that creates a much larger change.”

Apple’s corporate offices, data centers and retail stores are already carbon neutral. The challenge the company now faces is figuring out how to reduce its sizable supply chain carbon footprint. One method will be using more recycled materials when building its products, thereby reducing the need to smelt raw materials. In addition, Apple is investing in an exciting new aluminum smelting process that releases oxygen instead of greenhouse gasses.

“The commitment means dozens of iPhone and Mac producers … are pledging to transition to clean energy manufacturing within a decade,” Michael Kan writes for PC magazine. “Over the years, Apple has been pushing its suppliers to adopt clean energy, such as solar and wind power. The company now says 71 manufacturing partners in 17 countries have committed to 100 percent renewable energy for building Apple products.”

Learn how to produce a ripple of your own

In the media release, Cook states that businesses have a “profound opportunity” to help build a more sustainable future that is born of a common concern for the planet we share. Here at ASCM, we couldn’t agree more — and we know the power of supply chains to make an impact and help make that vision a reality. So, I am thrilled to announce that we have launched a brand new conference experience, ASCM CONNECT Virtual. The event includes a learning pillar focused on sustainability, which includes educational sessions that are specifically designed to give you the tools and knowledge you need to establish forward-looking ecological practices in your own global supply chain. Topics include the circular economy; climate strategy; energy, water and waste; material usage; product life-cycle stewardship; and much more.

In addition to the sustainability pillar, ASCM CONNECT will feature thought leaders and innovations in

dynamic fulfillment
emerging trends
industry 4.0
intelligent supply
operational excellence
synchronized planning
talent, leadership and culture.

Plus, during her keynote presentation, Katty Kay, lead anchor of BBC World News America and bestselling author, will share her unique worldview on some of the biggest challenges facing today’s supply chains.

Straightforward, linear supply chains are a thing of the past. In today’s global, complex, digital ecosystem, the only way to run a truly optimized and sustainable network is with strong connections. These connections take the form of integration across business operations; collaboration and information-sharing among partners; a clear understanding of how one decision can affect countless others; and the communication and synchronization of people, processes and data.

ASCM CONNECT Virtual is the premier event connecting you with the global supply chain community, best practices, new ways of thinking, and endless ways to advance your organization and career. Supply chain connects the world, and ASCM connects us — especially during difficult times. I encourage you to learn more and register today.

Blocks and Beams: The Foundation For Superior Talent, Strategy and Trust

Wed, 22 Jul 2020 00:00:00 -0500

The networks that comprise today’s supply chains are reflections of stakeholder interests and the challenges being faced. Accomplishing the work of supply chains consistently — and while balancing service levels, costs and asset streams — involves a lot of moving parts. Increasingly, success depends on the development and engagement of strategic teams that are designed for action, focused on results and built upon trust.

The many challenges of supply chain management have technical, market and economic roots. They shape forward planning, decision-making practices and criteria, and the ways in which risk management and problem-solving are factored across enterprise management. They also influence economic and strategic value-added processes, as well as the comparative advantage of suppliers, customers and partner organizations.

Strategic teams are an essential force for building and sustaining the gains that accrue within and across supply chain systems and networks. Consider first the importance of collaboration — people working together with high levels of preparedness, capacity, resilience and knowledge sharing. This facilitates value generation for stakeholders and supports the evolution of supply chain systems. Likewise, the power of engagement via people operating with a common purpose and strategic intent is essential to achieving near- and long-term goals. Lastly, adaptable strategic teams that enable people to approach their work with a dynamic sense of need, impact and perspective make it possible to navigate zones of conflict and cooperation alike.

BEYOND CONVENTIONAL MARKERS OF EXCELLENCE

The most familiar indicators of supply chain performance and value have been geared toward service levels, costs-in-stream, lean and process metrics.

These metrics bring attention to the functional side of the supply chain operation and serve as essential needles on organizational performance gauges. They work well for assessing operational throughput and capacity. However, there is an assortment of indicators connected to the intangibles of supply chain management. These hidden measures evaluate comparative advantage for near- and long-term intentions, goals, challenges and transformation; supply chain talent; and various cultural factors such as thought and behavior.

Hidden measures are sometimes considered in standard planning cycles, meetings, C-level reviews and other typical management system formats. More often, they are addressed in the context of the softer side of organization reviews. Without a framework for enterprise development, that is where they will remain — interesting, but constrained.

TALENT BLOCKS AND BEAMS

While most larger organizations have definitive supply chain professional development tracks built around standard functions, fewer have a talent-specific development framework. Talent blocks and beams help supply chain leaders and managers get the right people in the right roles, with the right acumen; capacity; and opportunity for professional development, growth, contentment and change. Most importantly, they provide a framework for fine-tuning and maximizing those hidden measures that can really mean the difference between supply chain success and failure.

A team is a lot like a building: It needs a sturdy structure in place to weather all manner of conditions. Without that structure, teams will be incapable of adapting and expanding as the needs of the enterprise evolve. The blocks-and-beams approach is designed to help supply chain professionals think in terms of the foundational competencies (blocks) each team member brings to the mix and the professional and personal strengths (beams) they have to provide structure and carry weight.

There are six areas of capability and experience that people possess, spanning all relevant areas of business expertise. These include a range of both hard and soft competencies that are important across the organization:

Technical capacity provides specific subject matter expertise to general supply chain tasks and challenges.
Creative capacity brings to the table new, often breakout ideas for consideration and development.
Analytic capacity adds data resources and pattern sense to supply chain planning and decision-making.
Resource capacity contributes a critical supply chain sense to the use of time, money, space, flow and asset appropriation.
Solution capacity powers supply chain option/decision assessment, issue reconciliation, problem mitigation and recovery.
Relational capacity connects people, groups and issues with the power to spread supply chain influence and learning.

Surrounding the talent blocks are a number of talent beams that support individual and team development. The individual and collective beams are two essential support elements, guiding engagement, integration and performance. Another set of talent beams supports professional and career track development. These are defined by credentials, experience and functional knowledge, as well as the capacity for leadership and management.

All in force, these talent blocks and beams reflect the basic DNA for supply chain management success and competitive advantage.

ENTERPRISE IMPACT

Supply chain management connects demand and supply activity and value with systems, people, ideas and methods. Entire business models are predicated on supply chain functions and networks. Strategic teams represent the answers to the questions that are so often at the heart of the enterprise and on the forefront of enterprise planning, decision-making, risk management, problem solving and value creation.

Designing and deploying excellent strategic teams is the key to readiness in

functional depth and strength in supply chain management through building, using, improving and growing the organization’s capacity for excellence and operational impact
cross-functional scope and range via sharing, extending, connecting and enhancing supply chain interfaces within and beyond operational borders
trans-enterprise reach and power by blending, mixing, sparking and changing the value stream of the enterprise, as well as shifting margins and asset relationships.

Furthermore, the natural forces of change in the marketplace and supply chain organizations have informed the structure and relationship of work to be done, along with approaches that address three significant concerns. They include the following:

1. The full engagement of individuals and teams as part of the organization’s strategic agenda, the comprehensive roadmap for enterprise growth, performance and change

2. The effective arrangement of talent in key areas of responsibility by specific competencies, motivation and connections; talent prescribed and matched in terms of experience, knowledge, judgment and perspective; and overall human capital dispatched as talent blocks and beams with effective leadership at every level of the organization

3. The advancement of the organization’s cultural agenda as both an expression of, and a foundation for, moving the everyday thought and behavior of supply chain teams.

Strategic teams built on talent blocks and beams are more collaborative and prospective in the execution of the work to be done, which also enables them to be more adaptive and agile in their formation and deployment. Plus, such teams are better equipped to address cross-functional and cross-enterprise challenges, such as the ongoing evolution of supply chain technology, operational interfaces and economic value streams.

REPUTATION-WORTHY TEAMS

Organizations compete based on product and service differentiation, capacity management, revenue leverage, scope, scale, and resource usage. Without exception, supply chain management competence and maturity in strategic teams are part of the equation. In fact, by approaching supply chain management with a sense of the natural goals of business, it becomes possible to view everyday thought, behavior, practice and culture as foundations for taking care of customers, economic performance, enterprise stewardship and competitive advantage.

Perhaps most importantly, when strategic teams approach supply chain management with an appreciation for what the marketplace expects of preferred suppliers and partners, they benefit from having a crystal-clear picture of the customer experience. Are we easy to do business with? Are we consistent and predictable? Are we admirable business colleagues and partners? Are we credible and trustworthy? Answering these questions in the affirmative puts any supply chain organization in a strong position to succeed and thrive.

Types of Strategic Teams

When deployed to address the frontiers of automation, systems integration, collaboration and compliance, strategic teams are effective working assets. They can address targeted problems or special situations; bridge a specific pathway of transition in the functional processes of supply chain management; or manage functions, models, roles and interfaces.

Some of the most common teams in supply chain management organizations include the following:

Workout teams deal with operating and resource management problems. The typical workout process is focused on problem mitigation, resolution and recovery. Workout teams are often deployed in situations that require significant fixes and forward recovery plans.
Insight teams generate and analyze data, perspectives, challenges, prospects and scenario parameters. They might be assigned to explore technical, market and operating trends; or they might be chartered to develop and maintain forward business scenario models.
Tiger teams are dispatched to deal with quick responses to recurring or highacuity problems that block performance. They deploy, reset operations and withdraw rapidly.
Platform teams support the core planning and development work that surrounds new functional and operating models for the enterprise.

Two things are noteworthy here: First, different kinds of strategic teams are designed to extend beyond the normal structural lines of the organization in order to address specific challenges and objectives. This is the new structure for making strategy happen. Second, they serve in different project management roles, becoming catalysts to everything that counts in supply chain management.

Upgrading Supply Chain Cleaning, Sanitation and Safety Standards

Mon, 20 Jul 2020 00:00:00 -0500

When COVID-19 became widespread, many people reacted by trying to control their exposure to the virus. This included social distancing, working from home and doubling down on cleaning. Lysol, Clorox wipes and paper towels soon disappeared from store shelves as consumers focused on preventing viral spread. Supply chains, too — from factories to retail stores — have realized that their previous cleaning techniques might not be effective enough to kill a virus and prevent its spread among employees or customers. In fact, many organizations have completely altered the ways in which they keep their buildings, products and employees clean and safe.

In an interview for the podcast “Six Feet Apart with Alex Wagner,” Jeff Dunn, CEO of produce and juice purveyor and distributer Bolthouse Farms, describes how his company drastically changed in the weeks since COVID-19 started to spread. It has broken its plant’s 1,700 employees into teams of 10, with their own breakrooms and paths to the plant, and they “sanitize behind them,” he said. “We re-engineered how the plant runs in order to put social distance between the people.”

He points out that other companies have seen issues when neglecting to use social distancing in their warehouses — specifically, people working very closely to each other or failing to sanitize equipment between users have gotten sick. Dunn noted that the U.S. Department of Agriculture and CDC didn’t have protocols in place for infections in plants when the pandemic began, so the “really smart people” at his company had to come up with their own plan. (The CDC has since released general guidelines.) Because Bolthouse Farms is a food business, it formulated its response to the pandemic by following food safety crisis management principles, which outline responses to pathogens or food safety incidents.

By breaking the employees into small groups, dividing sections of plant with plastic sheeting, taking each person’s temperature before they enter the plant, regularly cleaning equipment and offering frequent testing for the virus, Bolthouse Farms is not only limiting employee exposure, but also limiting the fallout if one person does become ill: They won’t have exposed the entire plant to the virus, which would likely mean closure and quarantine; only their small group will have to stay home as a precaution. Dunn likens the process to “guerilla warfare.”

Other food companies are following similar tactics. Trader Joe’s has outlined the precautions it is taking in its stores to safeguard the health and safety of crew members and customers. Steps include staff wellness checks, which screen for potential exposure to COVID-19 and for symptoms consistent with a COVID-19 infection; prioritizing good hygiene practices, including access to frequent hand washing; increasing routine cleanings, paying close attention to high touch areas such as restrooms, register areas, grocery carts and hand baskets; introducing practices to support social distancing; installing plexiglass barriers at the registers; and providing personal protective equipment for crew members.

A study published in The Lancet details how long the coronavirus can survive on various surfaces, with results ranging from three hours to seven days. Still, scientists can’t be sure whether a sick person who packs a product into a plastic bag or shipping box may infect the next person who touches the goods.

AmerisourceBergen, a pharmaceutical wholesale distributor, hosted a virtual town hall to inform stakeholders about the practices being taken to keep employees safe, as well as its continuity plan. Panelist Erin Horvath, president of distribution services, referenced a conversation with the CDC, in which she discussed cleaning guidelines in distribution centers, such as using electrostatic sprayers and other sanitizing procedures at a greater frequency, social distancing, adjusting break and shift schedules, and barring outside vendors from entering the building. The company also has instituted stricter guidelines with courier drivers, asking them to immediately notify AmeriSourceBergen if they or someone they have been in contact with has COVID-19. Driver vehicles, too, are regularly cleaned and sanitized.

According to Patty Olinger, executive director of the Global BioRisk Advisory Council, in a story reported by NPR, the average person isn’t necessarily qualified to properly sanitize surfaces infected with an airborne virus. The global cleaning industry association, ISSA, launched a new online course and certification in April to “train participants how to prepare for, respond to and recover from biohazards in the workplace, including control measures for infectious-disease outbreaks such as COVID-19.” Olinger hopes it will become industry standard and something organizations will be able to use to demonstrate their commitment to cleaning, sanitation and safety far into the future.

Safety First — Always

Fri, 17 Jul 2020 00:00:00 -0500

I’m certain I’m not alone when I say that I crave the opportunity to get back into our offices with my colleagues once again. There’s something special about a casual conversation while riding the elevator or just stopping by someone’s desk to share a story or ask a question. This sense of community is a huge part of ASCM, and missing out on it each day has been dispiriting to say the least. Beyond that, Zoom fatigue is real — hunching over a computer screen 24/7 is no way to live. Again, I’m sure it’s not just me.

So, I understand the desire to get business back to normal. But the fact remains: Our people’s well-being is everything; there is no economy if we don’t have healthy workers.

COVID-19 has been the largest disruption to manufacturing in modern history. Companies everywhere were forced to stop production; furlough employees; and, in some cases, close their doors forever. Many have faced a significant number of their employees contracting the virus. As we hopefully begin ramping up again, organizations must figure out what’s next, always keeping our people at the forefront. While there are no absolutes, agencies including the Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration have offered guidelines to help us reopen safely. Recommendations include avoiding and tracking contact, thorough cleaning and sanitization, implementing physical barriers, providing personal protective equipment, and frequent testing.

Unfortunately, Bloomberg has recently reported that many organizations believe testing is simply too complex and expensive. Diagnostic tests start at about $100 each. Plus, there are serious questions related to access and privacy. According to the article: “Employers, many of whom are already facing massive losses from shutdowns, often find the cost doesn’t make sense. Antigen testing, which screens for active infections and provides rapid and cheap results, has promise, but is only beginning to come to market.”

The Bloomberg authors also note that logistical challenges can add even more difficulty. For example, test results often take more than a week to come in, and supplies continue to be very limited. Furthermore, the CDC estimates that 40% of people with COVID-19 are asymptomatic, so screenings do not prevent them from coming to work.

Caring for our most valuable resource

Functioning in isolation isn’t easy, but the distancing economy does have a silver lining: It has taught us how to identify and maximize our strengths; devise inventive ways to restructure processes; and take advantage of new, more creative ways of doing business.

In the brand new edition of SCM Now magazine, Editor-in-Chief Elizabeth Rennie writes: “The supply chain community has learned how critical it is to maintain regular contact with employees, put in place necessary safety protocols, and let workers know that the company cares about their well-being. After all, it is people who form the foundation of the business and who will ultimately get it back on track.”

This issue of the award-winning SCM Now explores more lessons learned from the pandemic, as well as tips for leading through uncertainty and an innovative approach to creating superior strategic teams that are built on trust and designed for action. The official magazine of ASCM is full of real-world insights and practical solutions from supply chain thought-leaders from across the globe. Take advantage of this key member benefit today.

Retailers Use Supply Chain to Harness the Power of Brand Loyalty

Wed, 15 Jul 2020 00:00:00 -0500

Industry, consumer and technology factors are creating new opportunities for retailers to become a targeted customer’s preferred brand — if they can radically rethink supply chain operations and relationships with suppliers, fulfillment operations and ecosystem partners. As consumers gravitate toward buying from retailer brands for which they have a strong preference, a modern version of brand loyalty will emerge.

To become consumers’ preferred destination and succeed in this new age, it’s essential to develop a “thinking supply chain” that captures and retains customer loyalty. At the same time, supply chain ecosystems must collaborate and accelerate decisions based on a trusted, secure and intelligent relationship, through which all parties jointly understand and fulfill demand. This enables retailers to increase efficiency and become that preferred brand.

Brands must develop new types of agreements, metrics, decision-making criteria and systems to work together to accelerate decision-making, improve supply chain execution and loyalty. This hinges on establishing a culture of sharing and trust throughout the supply ecosystem, as well as a singular focus on serving customers. To secure their place as a preferred destination, all parties in a retailers’ supply chain must operate as a part of a collaborative, customer-focused unit that is dedicated to driving business together. This is a significant change from the traditional point-to-point supply chain execution where individual entities make decisions based on their own criteria or where individual touch points within a supply chain are the subject of optimization.

Supply chain executives are charged with matching supply and demand by orchestrating the ecosystem, managing the flow of goods, and putting the right products in the hands of customers — all while controlling costs. It’s essential to invest in supply chain because it is the key operational function with the greatest potential impact for improvements on both customer experience and costs. Chief supply chain officers, who have long been viewed as cost center managers, are now front and center in the battle for growing the business by fulfilling on brand promise.

Customer lifetime value, a critical business metric indicating the revenue one can expect from a customer over the course of the relationship, indicates loyalty performance. High loyalty means retailers can maximize revenue over time and minimize the cost of acquiring net-new customers. The total customer spend and length of the relationship can be directly influenced by supply chain execution that meets delivery promises in a cost-effective manner.

Supply chain execution is ground zero for an environment where customers make purchasing decisions based on brands’ ability to provide compelling offerings, fulfill on brand promise and accurately anticipate future demand. Managing supply, demand and flawless execution efficiently throughout the supply network is a competitive necessity. Supply chains that ensure long-term loyalty are fluid, flexible, responsive and interconnected in order to understand, meet and anticipate demand.

To grow loyalty, retailers should apply the same level of effort spent transforming online buying processes to making their supply chains more collaborative and responsive. IDC's 2019 Global Retail Innovation Survey revealed that many retail leaders are already starting to give back-end operations (omnichannel order orchestration and fulfillment, just-in-time production and real-time inventory management) the same attention as they did in digitizing and transforming their front-end experience. These best-in-class businesses are nearly twice as focused on implementing intelligent fulfillment than the laggards, taking action to improve service and satisfaction levels — key loyalty drivers.

Service drives satisfaction, satisfaction drives frequency, frequency drives loyalty, and loyalty drives higher customer lifetime value. Again, supply chain execution directly impacts customer lifetime value.

Numerous smart brands are developing unconventional supply chain initiatives, partnerships, acquisitions and formats to improve offerings, execution and loyalty:

Kohl’s and The UPS Store are taking Amazon returns. This gives them insight into customer preferences, a new source of foot traffic, and access to net-new shoppers while providing an appreciated service to customers.
Nordstrom Local, a new concept, is an inventory-free store and convenient online delivery and return destination for Nordstrom shoppers. This format features personal stylists, dressing rooms and value-added services such as tailoring that can drive loyalty.
Instacart provides ecommerce, fulfillment and delivery services for retailers and consumer packaged goods companies such as Sur La Table, Aldi and Smart & Final. Third-party ecommerce fulfillment companies give retailers the local presence needed to fulfill ecommerce orders.

These affiliations enable retailers to improve loyalty through valuable services and by gathering additional demand signals to make more informed decisions in the future.

Recommendations for successful transformation

New technologies including the internet of things (IOT), blockchain, artificial intelligence (AI) and more — play an important role in connecting parties, informing decisions and automating execution to improve supply chain responsiveness. These tools also provide the foundation for retailers to move from conducting linear transactions to collaborative supply chain partnerships.

Retailers must think big and work small to craft a compelling long-term vision and bring it to life through a series of concrete, programmatic projects. Given the supply chain changes required to lead in the new wave of loyalty, a fresh approach to communication, systems and skills will be required. Further, support a successful transformation across the supply chain by

soliciting support and buy-in early from the C-suite, including executive air cover, budget and commitment to develop new systems and skills
exploring existing consortiums, industry hubs, service providers, vendors and regulators that have initiatives underway or other types of useful expertise
starting with a pilot program with key partners to address a business weakness
investing widely in education to get agreement, input, and help identifying obstacles
identifying existing IOT network and AI foundations and expertise in use in other areas of the enterprise
prioritizing trust, sharing and security among supply network partners.

Retailers can increase loyalty and efficiency through collaborative, flexible and responsive supply chain execution. New technologies provide the intelligence, automation and power top retailers need to take advantage of new opportunities and become consumers’ preferred destination in the new wave of brand loyalty.

What Does USMCA Mean for Your Supply Chain?

Fri, 10 Jul 2020 00:00:00 -0500

The United States-Mexico-Canada Agreement (USMCA) took effect this week, replacing the 25-year-old North American Free Trade Agreement (NAFTA). Many supply chain professionals have already factored in the related changes. For others, there are some important updates to note — particularly new regulations, which tend to be very product-specific. Unsurprisingly, the key will be working with your partners to ensure high levels of visibility and to position your supply chain for success.

According to CNN, there are five main points to consider:

1. Auto manufacturing boost. The USMCA incentivizes companies to build cars and trucks in North America by requiring 75% of a vehicle’s parts to be made in one of the three countries to remain free from tariffs when moving between the nations. It also says more vehicle parts must be made by workers earning at least $16 an hour. These changes are expected to cause a small increase in the price of vehicles while adding 28,000 automotive jobs over six years.

2. Stronger labor laws. An interagency committee will monitor Mexico’s compliance with labor obligations and labor reform implementation. And, for the first time in any U.S. trade agreement, USMCA allows for rapid-response panels to review and potentially fine any facilities suspected of violating worker rights.

3. More access for U.S. dairy farmers. NAFTA had eliminated tariffs on most agricultural products traded among Canada, Mexico and the United States, and the USMCA will keep those tariffs at zero. It also opens up the Canadian market to U.S. dairy, poultry and eggs. In exchange, the United States will accept more Canadian dairy, peanut products and sugar.

4. Updates for the digital age. “The USMCA includes sweeping new benefits for the technology sector,” Katie Lobosco writes in the CNN article. The new provisions could provide a boost to U.S. businesses by prohibiting Canada and Mexico from forcing U.S. companies to store their data on in-country servers.

5. Environmental protections. The agreement allocates $600 million for environmental advancements and makes regulations easier to enforce by eliminating a requirement to prove a violation affects trade.

In addition to these five points, some experts note that new rules of origin will add complexity for shippers and require heightened visibility throughout their networks.

Knowledge is power

The APICS Certified Supply Chain Professional (CSCP) designation explores global supply chain management with a specific focus on international trade. Globally recognized as the industry standard, APICS CSCP designees gain the skills to effectively manage global supply chain activities that involve suppliers, plants, distributors and customers across the globe.

Now is the perfect time to start your CSCP journey, as ASCM has just launched the APICS Summer Certification Challenge. The rules are simple:

1. Complete your APICS certification by September 30, 2020.

2. Share an image of your electronic certificate on social media with the hashtag #APICSCertificationChallenge.

3. Challenge your friends and colleagues to participate.

APICS certifications and the body of knowledge have been a global standard in supply chain learning and professional development for more than 60 years. And people who hold at least one APICS certification report 21% higher median salary than those without. I hope you will join the challenge – it’s a great first step toward a more rewarding career.

Reconsidering the Way We Communicate

Wed, 08 Jul 2020 00:00:00 -0500

In our current era of advanced robotics, artificial intelligence (AI), machine learning and more, it’s tempting to think that we can just sit back and rely on these exciting innovations to make decisions for us. Technologies are getting smarter and dominating the headlines, but the fact is, AI can’t replace the value of talking with partners and establishing a human connection. Supply chains demand high-quality communication among all stakeholders that enables these people to control costs, better predict revenue streams, maximize the workforce and improve overall business processes.

Achieving these goals starts with creating a culture of sharing among your team members. Be transparent about your need for open communication and your desire to understand what’s happening within your supply chain. By making team members feel comfortable about informing you of bottlenecks or mistakes, you will be able to catch small errors before they become serious issues. Your team culture also must include respect and honesty — particularly because this courtesy trickles down to your customers, suppliers and other partners, which reflects positively on your company.

Next, when having important business discussions, ensure these communications focus on metrics. Discuss what is most relevant to your business and the products moving through your supply chain. Make sure you are on the same page with regards to the definitions of quality, acceptable costs and lead times, and other pressing concerns.

Connect with your partners regularly. Set up calls or meetings at least once a quarter to talk about what is and isn’t working. Seek to understand how they gauge success. Are they concerned about inventory counts? Do they want to know about cross-dock options or times when your warehouse isn’t as busy? Are they trying to run lean and need you to shift a process to support that?

Following are some additional communication best practices:

Be succinct. Express yourself clearly and concisely when making a point or asking a question. This also keeps conversations and meetings short and sweet, which shows that you respect everyone’s time.
Communication is a two-way street. Listen more than you speak, and you’ll discover what your partners need and also avoid unnecessary calls, emails or meetings to circle back on issues that didn’t get resolved the first time.
Tailor your message to your audience. Each of your stakeholders has a different need. Focus on the particular person you’re speaking with, and be specific. Always aim to employ the same language that they are using.
Make it personal. In a world of texts and emails, we sometimes forget that we are communicating with actual human beings. Whether it’s a face-to-face visit or picking up the phone, the personal touch goes a long way.
Be proactive. Reach out early and often. This makes you seem more approachable and establishes a culture of starting conversations before things go wrong.

Communication has never been more important in supply chain than it is right now. Be open and willing to connect, and people will want to work with you. These kinds of relationships bolster the entire network — something we can all appreciate.

Making Strides in the Race for a COVID-19 Vaccine

Thu, 02 Jul 2020 00:00:00 -0500

For months now, medical experts have stressed that an effective vaccine is imperative to stopping the COVID-19 pandemic, which has killed an astounding 500,000 people and infected 10 million. A vaccine is step one; step two is achieving herd immunity, which involves at least 80% of people receiving that vaccine. “When most of a population is immune to an infectious disease, this provides indirect protection … to those who are not immune,” explain epidemiology professors Gypsyamber D’Souza and David Dowdy from the Johns Hopkins Bloomberg School of Public Health.

To develop a COVID-19 vaccine, there must be extraordinary levels of cooperation between the public and private sectors — including governments, academic institutions, industry and philanthropic organizations. Furthermore, significant manufacturing capacity is critical, as well as the ability to navigate supply chain hurdles, such as distribution system and cold chain challenges. And all of that doesn’t even begin to address projected barriers related to cost.

However, according to Reuters, we do seem to be making progress: “Vaccine alliance finds manufacturing capacity for 4 billion doses of coronavirus vaccines” details how the Oslo-based Coalition for Epidemic Preparedness and Innovation (CEPI) is backing nine potential vaccines and has identified manufacturers with the capacity to produce 4 billion doses per year from 8-to-10 regional distribution sites.

CEPI is supported by 14 governments, Britain’s Wellcome Trust and the Bill and Melinda Gates Foundation. Thus far, the organization has deployed $829 million in search of a COVID-19 vaccine, with the hope that at least some will be successful.

Supply chains give the edge

ASCM is uniquely positioned to add value to this important effort — and one way we’re doing that is by working with the Bill and Melinda Gates Foundation to address COVID-19 response efforts in developing nations in Africa. Thus far, we have

identified high-risk COVID-19 supply chain segments, including those delivering home health to the general population and critical care for health workers and people with severe diagnoses
leveraged ASCM’s new Global Health Supply Chain Maturity Model to assist response teams with quickly identifying supply risks
facilitated collaborative workshops with donor teams and local implementation partners to conduct risk-mitigation activities.

In addition, the ASCM Foundation is currently supporting ministries of health in efforts to develop tracking tools and a demand plan for COVID-19 laboratory testing kits and related commodities, including sample collection kits, sample transport media and personal protective equipment. Plus, the data we have already collected on COVID-19 caseloads will enable the ministries of health to forecast the commodities required for performing hundreds of thousands of tests in the coming months.

I invite you to learn more about these initiatives and how ASCM and the ASCM Foundation continue to make an impact every day. More importantly, you and your organization can play a critical role in helping us harness the power of supply chains to create a better world.

The 6 Essential KPIs

Wed, 01 Jul 2020 00:00:00 -0500

Supply chain professionals understand that key-performance indicators (KPIs) are vital to reaching strategic and tactical objectives. Issues are identified, improvements are made, and goals are more likely to be met. There are dozens of metrics out there, but I suggest taking a more realistic approach and focusing on just six KPIs. Each of these can be automated to at least some extent with enterprise resource planning (ERP) or material requirements planning software:

1. On-time supply is the difference between orders delivered on time and delivered late, divided by the number of total orders. Tracking this KPI helps you understand whether or not a supplier is reliable.

2. Even you aren’t tracking your suppliers’ ability to deliver materials on time, on-time delivery — calculated by shipments delivered on time versus late — may indicate a need to do so. It also can identify possible issues in customer logistics. For many, this is the most important KPI because it speaks to customer satisfaction and can directly affect the bottom line.

3. Downtime in proportion to operating time is the ratio between the time production and supply chain lines are stopped and the time they operate. This ratio is a direct indicator of asset availability for production. The lower the number, the more efficiently your manufacturing equipment is being used. A ratio of 0.5 indicates production lines were stopped half of the time.

4. Productivity in revenue per employee shows areas with the least and greatest return on investment and can be examined on several levels: company, department and even production line. Find this number by dividing all generated revenue by the number of employees.

5. Incoming material quality is the amount of time or money spent repairing a product because of the quality of materials used. This can be examined by supplier, by product category or as a percentage of faulty materials versus good materials.

6. Extra inventory ties up valuable financial and real estate resources, as you want to use your space for production, not for storing extra materials and components. Inventory turnover control is calculated by the number of days materials haven’t moved from warehouse storage to production. The higher the turnover rate, the more efficiently your supply chain is built. The number varies by industry and manufacturer-specific needs, but, as the general rule, turnover should be 30 days or less.

Maximize your KPIs

Many outside factors can influence the efficiency of a supply chain. Still, tracking the performance of an operation with KPIs can be the difference between success and failure. Keep in mind that supply chain metrics by themselves can’t solve ongoing issues; they are roadmaps and compasses, showing whether an operation is moving in the right direction.

Finally, identifying the problem and its cause is just the first step. While many believe that software alone can monitor and track KPIs, it also takes an investment of management time.

Join the APICS Summer Certification Challenge

Tue, 30 Jun 2020 00:00:00 -0500

Countless sporting events have been canceled this summer, but you still have the opportunity to partake in some friendly competition — in a safe, socially distant manner, of course. The APICS Summer Certification Challenge is a global event, through which supply chain professionals everywhere can challenge and encourage each other while earning a Certified in Production and Inventory Management (CPIM); Certified Supply Chain Professional (CSCP); or Certified in Logistics, Transportation and Distribution (CLTD) designation. Certification is a major accomplishment and a proven way to increase your salary and advance your career.

The rules are simple:

1. Complete your APICS certification (CPIM, CSCP or CLTD) by September 30, 2020.

2. Share an image of your electronic certificate on social media (either LinkedIn, Facebook or Instagram) and tag it with this hashtag: #APICSCertificationChallenge.

3. Challenge your friends and colleagues to participate by completing their APICS certifications.

All posts that include #APICSCertificationChallenge will be recognized in an ASCM video in October.

APICS Certifications

APICS certifications and the body of knowledge have been a global standard in supply chain learning and professional development for more than 60 years. Companies around the world recognize and, in many cases, require APICS certifications when recruiting and making hiring decisions.

CPIM (Certified in Production and Inventory Management) gives you the tools and techniques you need to improve the efficiency of your company’s internal processes.

CSCP (Certified Supply Chain Professional) gives you the knowledge of the end-to-end supply chain that you need to help your company make your supply chain more competitive and a strategic asset.

(CLTD) Certified in Logistics, Transportation and Distribution gives you the tools and techniques you need to improve the efficiency of your logistics and transportation capabilities and distribution and warehouse facilities and processes.

For more detailed information about APICS certifications, visit our APICS Certifications and Credentials page.

This summer is like no other — you might as well take advantage of the free time on your hands. Completing your APICS certification may not be as fun as going to a ballgame, but taking your career to the next level will undoubtedly provide exciting new opportunities for your future.

Help Us Save Lives

Fri, 26 Jun 2020 00:00:00 -0500

Every two seconds, someone in America needs blood. Unfortunately, the American Red Cross is facing a severe shortage, according to a press release from the nonprofit organization, which supplies about 40% of the nation’s blood, supports disaster victims, provides international humanitarian aid, and much more. An unprecedented number of blood drives have been canceled as a result of COVID-19 closures. With more than 80% of blood coming from donation events at businesses, schools and community centers, hundreds of thousands of contributions have been lost.

The availability of an adequate supply of lifesaving blood is key to ensuring the effective treatment of hospital patients. Healthy volunteer donors are desperately needed to replenish the supply in the coming weeks.

“As a nation, this is a time where we must take care of one another including those most vulnerable among us in hospitals,” says Gail McGovern, president and chief executive officer of the American Red Cross. “One of the most important things people can do right now during this public health emergency is to give blood. If you are healthy and feeling well, please make an appointment to donate as soon as possible.”

McGovern also notes that her organization has implemented new measures to ensure blood drives and donation centers are safe for donors and staff, including

taking the temperatures of donors and staff
providing hand sanitizer for use throughout the donation process
spacing beds to follow social distancing practices between donors
staff wearing gloves and changing gloves with each donor
use of sterile collection sets for every donation
enhanced disinfecting of surfaces and equipment.

Blood is not like other therapeutic treatments. It cannot be manufactured or stockpiled, and there is no substitution that can fully replace all of its functions. Furthermore, red blood cells must be transfused within 42 days of donation; platelets within just five days. This causes unique challenges in the collection, production, inventory and distribution of blood.

Roll up your sleeves

ASCM is a proud supporter of the American Red Cross. To that end, we are working to raise awareness about its mission, especially during this very challenging time. Please join us by participating in the ASCM Sleeves Up blood drive. Pledge to give blood by scheduling an appointment with the American Red Cross at RedCrossBlood.org. You may also use the Red Cross Blood Donor App, call 800-RED-CROSS or activate the Blood Scheduling Skill for Amazon Alexa.

If you are unable to give blood, there are other ways to support the American Red Cross. Check out all of the volunteer opportunities, including transporting blood, stocking supplies and checking inventory at shelters. Finally, please consider making a donation to support urgent humanitarian needs. Together, we can make an impact and save countless lives.

Activate Your Supply Chain for a Digital Future

Wed, 24 Jun 2020 00:00:00 -0500

The increased availability of quality data and exciting technological advancements are outdating traditional supply chain organizational structures. Blockchain is changing the way materials are tracked from the source to end use. Robotic process automation is eliminating the need for humans to handle repetitive tasks. And the sharing and gig economies are transforming conventional workflows.

Functional governance models, the predictability of outcomes, product and service quality, risk management, documentation management, and more are soon going to look radically different. Developing a supply chain organization that can compete under these challenging circumstances therefore should be foremost on the minds of industry professionals. A network that is prepared will gain a significant competitive advantage over its competitors.

Unfortunately, supply chain’s generic response to shifts such as these has been to add more layers to the existing organization in order to manage complexity and reduce risk. These layers take the form of additional processes, unwieldy governance structures, added employees and more departments. To maximize the opportunities of digital transformation, supply chain needs a new philosophy.

ENABLING THE SHIFT

Most studies evaluating the future of supply chain agree that technological advancements, changing business needs and regulatory risks are the biggest issues facing the industry. This is borne out in multiple voice-of-the business surveys as well. Regrettably, proposed remedies invariably, once again, revolve around adding more layers to the organization.

There are two possible solutions to any change- management problem: an incremental response for an incremental change or a radical solution for a radical change. The dramatic shifts taking place as we enter the world of digital supply chain mean that we must choose the radical model. Following are strategies to make this work at your supply chain organization.

Design the network. The business outcomes you are seeking to deliver ideally should come from the company’s mission statement and long-term business plan. Create an internal organizational structure that delivers these outcomes with the lowest degree of separation from stakeholders. It also is necessary that the structure be designed in an iterative, agile manner, instead of the conventional build-operate-maintain model. Use the following guide to reevaluate your organizational framework.

1. Design internal processes by linking organizational nodes and technologies directly to business outcomes.

2. Leverage the power of your ecosystem. Think of solution providers as nodes within the broader network. Organize suppliers based upon spend and risk potential.

3. Evaluate the degree of separation between a business user and the outcome for each network node with a view to shortening the need-to-fulfillment time frame.

Consider a business that relies on 10 suppliers to manage a supply chain that delivers assembled products to its customers. Each group that uses parts from one of the 10 suppliers is front-line. To get the parts needed to begin assembly

front-line teams make a part request in a new tool that the sourcing group is using for its activities
sourcing then interacts with legal to prepare the contract
ongoing supplier-management tasks are handled by the contractor-relations group
enterprise resources planning entries are managed by a completely different team.

Of course, all of these internal layers extend the need-to- fulfillment time frame for the front-line group significantly.

On the other hand, the ideal digital supply chain would enable team members to make requests in the shortest possible time frame, just like ordering products from Amazon or getting a ride from Uber. Consider the improvements if this company instead used an internal team to manage the top three suppliers because of the importance of the parts supplied, a third-party logistics (3PL) or third-party procurement provider to manage the next five, and a shared services center to manage the last two.

Moreover, could this company use an automated tool to handle tasks such as contracting for low-risk parts, expediting, invoicing, ordering and the like? Might the business be better able to maximize the strengths of its supplier network, such as by leveraging a 3PL with strong forecasting, scheduling and dispatching skills to manage carriers? Likewise, is it really necessary to manage warehousing when a freight forwarder could use an outcome-driven contract instead by delivering products on a fixed schedule? Digital control tower tools also could help maintain visibility and ensure high performance levels.

Implement effective governance. Next, establish an effective governance mechanism — preferably one that involves business stakeholders. A governance mechanism that excludes the end users puts the supply chain function at risk of falling out of sync with the business. Consider the role of your internal stakeholders in ensuring that the right initiatives are being prioritized. Do they have a say in decisions that will affect their ability to execute?

Ensure consistent execution. Invest in a long-term approach to executing this strategy by ensuring that execution is paired with a well-thought-out transformational plan that revolves around continuous and consistent communication. Resist the urge to add layers to manage new risks. Your goal is to empower end users to rapidly satisfy business needs at the best value point. The need-to- fulfillment time frame is the key success metric.

Validate and adapt. Leverage technology to spot any variations from intended results. Invest in data- management tools and a process that helps you select the right partners — both internal and external — in order to rapidly respond to changes in your business environment. Frequently, organizations fail to recognize that external partners can be an effective means of measuring success against the broader industry. Execute the proposed changes over a five-to-seven-year period and in an agile manner. This will enable you to make small course corrections and ensure that the final structure is a fit for your business environment and organizational culture.

Start small, then scale up initiatives. Adapt as needed to certify that business goals are being met. Any digital supply chain transformation must be accompanied by a fail-forward mindset. Think of a baby growing into a toddler: Solve problems related to crawling first; then walking; and, lastly, running. Babies fall as they learn to crawl, but they learn from these tumbles and adapt skills that enable them to do better next time. This philosophy will ensure that your digital initiatives are delivering value to end users and providing the necessary return on investment.

REFLECT ON THE RISKS

As with any radical change, there are several risks associated with this proposed approach, which must be anticipated and addressed:

Get the design framework right. Starting the process with a poor understanding of business outcomes will lead to an organizational design that is unfit for the needs of the organization.
Be certain that the final design is flexible enough to adapt to any changes in the environment.
Prepare your supplier base. Your ability to deploy these changes will be contingent upon selection of the right business partners with the right mix of capabilities. If your ecosystem is not in step with your proposed strategy, reevaluate your partners or invest in upgrading their capabilities.
Not all available technologies will be a fit for your business. Take a build-versus-buy approach, and be sure technology deployment time frames are factored into the execution strategy.
Overcome resistance to change by focusing on benefits to the organization and always being candid about potential risks.
Prepare employees. Supply chain organizations on the verge of technological evolution often discover scarcity of talent to be a major hindrance to success. Review the skill sets required for future needs, and invest in building capabilities across the ecosystem.
There always is the possibility of external changes (raw material prices, regulations, the economy and so on) disrupting even the best-laid plans. Adopt an agile approach to your redesign by considering multiple deployment sprints.

In the end, no two organizational designs will look alike. Your eventual network will rest on your particular business needs, ecosystem capabilities, technologies, tools, risks and the broader economic environment.

REALIZE THE VALUE

When your supply chain is responsive and flexible, it can react to marketplace shifts more quickly, reduce its cost to serve, minimize personnel fluctuations and use its core competencies in a highly effective manner. Plus, it will become outcome-driven, rather than process-driven.

Meanwhile, thanks to the effective application of exciting new technologies — such as machine learning, robotic process automation and artificial intelligence —your business will be able to automate repetitive tasks and dedicate staff time to more value-added projects. Finally, heightened collaboration and data sharing among stakeholders will provide everyone with a holistic picture of the supply chain and ensure that this end-to-end, data value chain benefits the entire enterprise.

Business Lessons That Will Help Us through This Recession

Thu, 18 Jun 2020 00:00:00 -0500

Last week the National Bureau of Economic Research announced that the United States officially is in another recession. As tough as this situation is, we knew this day would come. In fact, five years ago, I wrote for this blog that we were due for a major financial disruption. Now we’re overdue, and we have to hope that we prepared enough.

COVID-19 is driving what could be the global economy’s worst economic recession since World War II. In May, the European Commission released projections that Europe’s economy will decline by 7.4% this year, driving the union’s worst economic recession in its history. Similarly, Japan — the world’s third-largest economy — entered a recession last month.

Economists note that this recession is different than those of the past. For starters, this recession was spurred by a global health crisis, rather than a financial issue. The speed of this economic collapse was much faster because COVID-19 quickly shut down economic activity in favor of stopping the spread of the virus. Millions of Americans were unemployed within a matter of weeks this time, whereas the Great Recession’s unemployment rate didn’t peak until October 2009, nearly two years after the recession started. Furthermore, the recession has hit most industries across the economy — from travel and hospitality to manufacturing to even government activities. These differences make it harder to predict how long it will take to recover.

Even if this year’s recession is unique, the lessons learned from previous recessions will be useful this time around too. The strategies used to bounce back from the Great Recession of 2007-2009 in particular could even hold some keys to success.

In a joint research project, supply chain experts at ASCM and the Center for Supply Chain Innovation at Texas Christian University’s Neeley School of Business uncovered critical success factors of supply chains that were able to rebound from this financial setback.

Specifically, the organizations that were better positioned to recover from the Great Recession reflected the following:

less waste that needed to be cut
better control over internal processes
a greater ability to absorb declining sales
better relationships with suppliers and customers, which led to lower inventories, transaction costs, and research and development expenses.

The firms that thrived also had a variable structure. They were more labor intensive and more productive and also outsourced asset-intensive and less productive processes.

Supply chain success

One cool — but not totally surprising finding — was that companies that invested in supply chain excellence outperformed their industry peers. The research findings show that these companies measured 4% above their rivals’ average return on equity decline and maintained 22% more market capitalization than their average rivals.

To find out how you can set your company and your supply chain up for success during these difficult financial times, register for ASCM’s new webinar series, “Lessons Learned: Global Insights on Supply Chain’s Role in the Economic Recovery Plan.” The first session, “Gaining Advantage Through the Recession,” which will take place Tuesday, June 23, 2020, at 10:00 a.m. CDT, will offer deeper insights into this joint research project and share the key performance indicators your organization should be focused on maximizing in order to come out ahead of this recession.

This first event in the series is open to all supply chain professionals, so be sure to invite your colleagues as well.

Alleviate Stress With This Simple Strategy

Wed, 17 Jun 2020 00:00:00 -0500

Stress is a choice.

Some people have a difficult time with this idea. They think that the things stressing us out are the people and events in our lives — market conditions, management, the boss, colleagues, customers, traffic, weather. But that simply isn’t true.

Yes, bad things happen: The economy sours, the stock market tumbles, our business struggles, jobs are lost, deadlines are missed, projects fail, and good people leave. Life is full of these challenges. But whatever the trigger event may be, we always choose our own response. We choose to react angrily. We choose to stuff our emotions and keep quiet. We choose to worry.

Stress is the result of these choices. The truth is, if you want to change a situation, another person or your own stress level, you must start with yourself. Personal accountability is absolutely essential to developing people and teams, achieving objectives, fulfilling any vision, competing in the marketplace — and reaching these goals with as little stress as possible.

THE RIGHT QUESTIONS

When we choose to ask why, when and who questions — such as, “Why me?,” “When will this happen?” and “Who is responsible for that?,” this takes away our control and leads us to a victim mentality. Even when we actually are victims of something, this kind of mindset only adds to our stress levels.

Instead, ask questions that start with “what” or “how.” For example, if you consider what you can do to make a difference or how you can complete a project on time, you are forced to think inward for a solution or plan. The answer comes from you, and you are accountable for your own choices.

Here are some examples that each of us comes across in our lives from time to time:

“Why don’t they communicate better?” Remember, both written and verbal communication can be all about the receiver’s perception. Effective communication means not only being understood, but also understanding the other person.
“When will something get done/arrive/ be ready for me?” When we ask “When?,” we’re really saying that we have no choice but to wait and put off action until another time. This leads to procrastination, missed deadlines and lower productivity. If you want to move forward, ask “what” questions. For instance, “What will it take for you to have the report to me on Friday?” This empowers the other person to tell you how they will get it done. Additionally, you have stated the deadline, so you are managing the process.
“Who caused this problem?” Team members rely on each other’s expertise to bring a project or a goal to a successful result. Compartmentalizing, infighting and lack of respect can drain the life right out of an organization and seriously damage the culture. Avoid the circle of blame by ensuring that you are practicing personal accountability before questioning others. Silos are for corn, not people.

PERSONAL ACCOUNTABILITY FOR THE WIN

People change one at a time, through their own resolve. Therefore, we must focus on controlling the things that we, ourselves, can control. There’s always a barrier of some kind to be overcome that will challenge us.

Winners don’t make excuses. Instead, they learn to appreciate each other’s unique gifts and strengths. Then, they play to those strengths. Perhaps most importantly, they demonstrate integrity by doing the right thing, even when no one is looking. That’s the best way to walk the talk and choose to live stress-free.

ASCM Announces 2020 Supply Chain Salary and Career Report

Fri, 12 Jun 2020 00:00:00 -0500

The world continues to face extraordinary volatility and uncertainty as a result of both the COVID-19 pandemic and the fact that many countries have now officially entered recession. At this pivotal moment, the importance of supply chains and the people who drive them has never been so profound. Our profession continues to prove its value each and every day, and we at ASCM are so proud to represent you and support the work you are doing.

I am thrilled to learn that you, too, feel a sense of fulfillment and satisfaction in being a supply chain professional. In fact, ASCM’s 2020 Supply Chain Salary and Career Report has once again revealed that you truly love your jobs. Nearly all of our survey respondents (88%) said they feel positively about their careers, and the vast majority (85%) would recommend supply chain as a career path to others.

More than 2,400 U.S. supply chain professionals participated in this year’s survey, sharing key insights into compensation, satisfaction, essential technical and leadership skills, and much more. Some of the findings include the following:

Supply chain professionals with a bachelor’s degree reported a median salary of $78,750, and those with an associate’s degree reported a median salary of $67,000 — both much higher than the national averages. Moreover, 91% of respondents received some form of additional cash compensation, such as bonuses or profit sharing.
The average raise received by supply chain professionals in 2019 was 4.7% — 1.2% higher than the national average. Notably, 18% of survey respondents reported receiving a pay increase of 10% or more.
These salary increases only improve with APICS Certified in Production and Inventory Management; Certified Supply Chain Professional; or Certified in Logistics, Transportation and Distribution designations. Those who hold at least one APICS certification enjoy a 21% higher median salary than those without any certification and 18% higher than those with non-APICS certifications.
Women ages 30-39 earn 93% of the salaries of men in the same age group, which is significantly better than the national average. Unfortunately, the gap is larger in the 40-to-49 age range and greater still for those who are 50 and older. Industry leaders must be cognizant of these discrepancies during hiring and promotion processes. Being transparent and intentional about diversity and inclusion is essential to addressing this inequality.
Leadership skills are key to success in a supply chain career, particularly communication, collaboration, critical thinking, future planning and problem-solving.
Finally, 88% of industry professionals surveyed said their company provides paid holidays, 78% have at least three weeks of paid time off, and 64% have access to paid family or medical leave. This is significant, as people who are given paid time off for caregiving are more likely to return to their jobs and stay longer.

Invest in your people

We may not know exactly where the global economy is headed, but the enduring need for talented supply chain professionals is a certainty. Make the most of this unique moment in time by offering your employees on-demand courses and educational videos, as well as one-day seminars, to help them gain sought-after leadership and technical skills. Consider performance-driven group training to help them build high-performing teams. And give them access to best-in-class certifications, globally recognized as the standard in end-to-end supply chain education — and a proven way for your most valuable resources to improve their lives through heightened earning potential.

Supply Chains Must Stand Together for Social Justice

Fri, 05 Jun 2020 00:00:00 -0500

As I write this, America is in turmoil. News and social media feeds across the globe are telling stories of protesters marching to increase awareness of social injustice and racial inequality. We have been inundated with accounts of devastating and inexcusable acts of hatred, threats and violence, as well as individuals who are bent on agitation. Even more shocking is the fact that much of this is exhibited by some who are supposed to lead and protect us. We must address these injustices.

While I have immense compassion for those who suffer as a result of systemic inequality, I have not lived it. I have not witnessed a pandemic raging through my neighborhood at an enormously disproportionate rate. I have not been a frontline worker putting their own well-being at risk in service of others. And I have not experienced recession as a black person trying to survive in a nation that distributes its wealth and opportunity so unjustly.

When problems are this immense, we may feel helpless, but we can make a difference if we focus on those things we can control. I know in my heart that the global supply chain community has the power to create a better world. I’m reminded of a quote from a colleague, Saif Rivers, vice president of global business services at IBM. I met Rivers at ASCM 2019 when he was honored with our Diversity and Inclusion award, which recognizes a professional who fosters business environments that value equality and individual differences. He shared the following: “The rapid change that we see in operational performance requires a different mindset, a different approach, a different set of skills, which can only be found by multiplying the voices.”

Words are often insufficient, but “multiplying the voices” is a powerful and important first step toward establishing real structural change. I also encourage you to talk to your colleagues about how to manage diversity into your supply chain, such as by recording and reporting on diverse supplier spend. And please consider getting involved with the ASCM Foundation’s diversity and inclusion initiatives, which strive to ensure that people of all profiles and backgrounds can do meaningful work, contribute unique perspectives and succeed in supply chain careers.

Diversity and inclusion is crucial — and something that we in the supply chain community can do right now — but it is only part of the solution. The income divide in the United States continues to intensify; in fact, the gap between rich and poor more than doubled between 1989 and 2016, with black households earning 61% of white households. This sustained erosion of wealth imperils upward mobility — the very premise that our country was built upon.

There is no doubt in my mind that access to education is the answer. It absolutely determines outcomes: When wealthier parents can invest in their child’s education and poorer parents cannot, the resulting disparity has tangible and appreciable consequences for America. We must reexamine and recreate current policies in order to generate opportunities for black people and empower them to change their circumstances.

Decades of research have shown that policies such as the GI Bill and student aid decrease poverty and social inequalities while enhancing the productivity, innovation and resources of the U.S. economy. A quality education for all begins with breaking down perpetual norms that obstruct equal access. We must play our part by electing officials who reflect our values and supporting intergovernmental agencies that are working to ensure parity.

Education without discrimination is a basic human right. There is no greater way to begin creating a nation of justice and equality.

5 Ways to Reduce Transportation Costs

Thu, 04 Jun 2020 00:00:00 -0500

There are many reasons why transportation logistics costs are skyrocketing these days. Lack of proper planning, transparency and decision-making all can lead to increased overall costs, failed deliveries and appointment targets, unhappy customers, and lost business. So, what can you do? Here are five important considerations:

1. Provide your drivers with well-optimized routes. One bad route can make all your good planning efforts futile. Vehicles run empty. Drivers face unbalanced workloads. Drivers spend more time on the road stuck in traffic or traveling longer-than-necessary distances. All of this leads to skyrocketing fuel usage and expenses. Add in any overtime costs for drivers spending more time than estimated on the road, and the bottom line looks even worse. To ensure accurate and well-optimized routes, consider using a route planner. This tool automates the route-planning process, factoring in traffic, weather conditions, sunrise/sunset times, one-ways, avoidance zones, weight and load capacity, and more.

2. Monitor drivers. Planning optimized routes may be the most important step, but it won’t have any impact on your total costs if your field reps and drivers don’t follow it. They may make personal stops, idle vehicles for too long, brake frequently or even accelerate harshly to make up for delayed deliveries or appointments. Such actions inevitably lead to increased expenses and even excessive fuel usage or road mishaps. Track your drivers and vehicles in real-time with a simple GPS to monitor status and provide speed alerts. A tracker can even help you protect your vehicles from theft.

3. Educate and reward field reps. Field reps are essential stakeholders in your transportation activities, and you cannot optimize transportation processes without their 100% involvement. So, let them know why it is important for the business to save on fuel, as well as how they can contribute to reducing other expenses. Rewarding them for fuel-efficient driving will boost their morale and commitment to saving even more. Again, a route optimizer can help. Its reporting and analytics feature will give you the data you need to identify every fuel expenditure, which you can then use to provide feedback about performance.

4. Ensure regular vehicle maintenance. A breakdown can cost as much as $760 per vehicle per day. Avoid breakdowns and keep your vehicles in top shape with preventive maintenance. A successful program tracks total distance traveled, number of stops and amount of fuel used, as well as regular vehicle inspections.

5. Eliminate failed deliveries. Sometimes, your drivers show up on time, but the customer is unavailable. Such an event not only jeopardizes your other deliveries or appointments, but also costs you more, as your drivers will need to go back to that stop again. One of the best ways to improve first-time delivery success is by empowering customers to choose their preferred delivery windows. Other proven methods include allowing customers to track their delivery statuses and providing notifications when packages are nearby.

Running smoothly

The turbulent economy is making it difficult for field service and transportation businesses to thrive. Gaining an in-depth understanding of your transportation costs — and how to mitigate rising expenses in order to improve profit margins — are essential to winning the transportation race.

That Software Update Is More Critical than You Think

Wed, 03 Jun 2020 00:00:00 -0500

Advances in technology facilitate the introduction of new software products at a faster rate than ever before. In fact, software vendors release new product versions as often as multiple times a month, weekly or even daily. In a highly competitive software market, vendors are under pressure to offer the latest and greatest features that outpace their opponents and meet the needs of their customers.

Given this trend, it’s no surprise that older products are left behind and eventually phased out. When this happens, software vendors try to move their existing enterprise clients to the newer and better product versions, which reduces the number of product versions that vendors need to support. Although customers may want to keep access to older versions of software, the problem is that each piece of software has a finite existence.

Typically, software products go through a four-stage life cycle:

1. Development: This is when the product moves through proof-of-concept and is first brought to market. The software may not be fully tested and could still require technological changes.

2. Growth: In the second stage, the demand for the product accelerates, and the total market size expands rapidly. Some vendors provide software services to their customers in this stage, which include continuous integration, application monitoring, server monitoring, log monitoring, automation testing, scripting tools, source code management, cloud enablement and infrastructure automation. This allows vendors to offer software updates and additional features.

3. Maturity: This is the height of the product’s adoption and profitability. Typically, during this stage, vendors stop making major updates and adding extra features to their products. However, they may offer support services, such as infrastructure setup, remote installations, performance management, performance tuning, and change and configuration management.

4. Decline: During the fourth stage, the product begins to lose consumer appeal, and sales drift downward. Companies begin phasing out their old software products and decide how long to offer support for their end-of-life products. This support may consist of bug fixes, maintaining the code base, providing custom enhancements and re-engineering. Lastly, during this stage, software vendors promote the next generation of their software.

Although software vendors want to move their clients to the latest versions, users may be a bit more resistant. For example, companies can be limited on their software upgrade frequency by a variety of factors, including financial costs as well as available time and information technology (IT) resources to transition all users within the company to the new software. In other cases, some users just prefer the features of the older version and feel that it suits their needs, which makes upgrading seem unnecessary.

However, as different software programs are upgraded, they become incompatible with legacy software. If such legacy software is used to run company operations, for example, and other software programs are incompatible with this key piece of software, the company could have major challenges.

There also are cybersecurity issues related to using older, nonsupported software. These programs do not receive security updates and therefore are more vulnerable to cyberattacks. Again, if this software is a key part of operations, companies could run into some major issues if it is left unsecured. A lack of security also could open a company up to legal or regulatory issues if they are required to maintain a certain level of technology security.

Other drawbacks to not staying up-to-date on the latest software include the following:

The software’s reliability decreases over time, leading to more frequent crashing of the software applications and maintenance issues with the computers.
If the organization’s customers use newer software versions, software incompatibility issues will occur more often.
Employees’ skills will become outdated because they are used to using only older versions of software products.
Operating costs may be higher with running end-of-life software because of necessary maintenance and debugging, especially when critical applications fail.

Companies do not necessarily have to be early adopters of new software, but it is critical to make updates frequently to keep your company’s computer network progressing. When in doubt, talk to your IT professionals and software representatives to determine if an update is necessary, what features and benefits the update offers, and when is the best time to update.

Supply Chain Is Everyone’s Business

Fri, 29 May 2020 00:00:00 -0500

Any supply chain professional will tell you that we spend a lot of our time explaining what we do to others. While there is much currently written about supply chains, not many people understand their depth and breadth. Often, after indicating that I work in supply chain, the response is, “What do you supply?” My first attempt at a clarification is to describe the various activities within supply chain, from raw materials to finished product, as well as the data used to make informed decisions.

It helps a little, but people still tend to look at me rather quizzically, wondering what this has to do with supplying products and/or chains.

Knowing that many individuals understand project management, I attempt to reference how that requires a network of coordinated activities, communications and resources to deliver a defined goal within a set timeframe, budget and scope. I note that these activities can span continents and people both inside and outside the organization. Then I get brave and explain how supply chains create order by organizing these activities along a predictable timeline and ensuring that each key transformation phase is specific and measurable.

Unfortunately, these discussions rarely amount to a crystal-clear understanding of the complexity and beauty of an efficient and effective supply chain. But we’re getting closer.

Then, I hit them with this: Supply chains create value for customers by delivering products and services. In so doing, they reach all aspects and functions of the business itself, as well as its partners. Through a vast network flows information, physical products and cash. Whether small and local or global and multi-organizational, supply chains touch everything and everyone. This is why they make such a significant impact on people, our environment and global economies. It’s also why supply chain is such a dynamic and rewarding industry to be a part of.

The opportunity now

Of course, in the era of COVID-19, the need to explain supply chain is fading every day. Supply chains are proving themselves to be the backbone of our economy, affecting almost every aspect of our lives. With these concepts and impacts now much better understood, our perspectives have changed. This is an extraordinary time, and those of us in supply chain have an opportunity to take this moment of awareness and use it to inspire others to get involved.

To that end, I am asking you to forward this article to someone you know who does not define themselves as a supply chain professional. Tell them a little bit about ASCM; but, more importantly, about the power of associations. Associations build strength by enabling people to innovate toward common goals. They create a more informed public and a more educated workforce. They produce groundbreaking research and valuable best practices. They develop a body of knowledge and standardized vocabulary to enhance communication and collaboration. Most importantly, associations unite individuals and organizations, which are distinct and diverse, yet share the same challenges and opportunities.

No matter the job or industry, everyone can advance their business and career through the essential supply chain resources that ASCM provides. Invite someone in your life to explore the possibilities today.

Kanban and the Lean Supply Chain

Thu, 28 May 2020 00:00:00 -0500

Supply chain management may sound easy on the surface: Provide the right product in the right amount to the right place at the right time. But the things that must execute flawlessly at each step to achieve those four goals can get complicated — and fast.

Couple those challenges with the fact that manufacturing industry customers increasingly demand greater responsiveness and efficiency. In this landscape, the better manufacturing businesses are at managing their resources, the better they’ll be at reacting quickly and consistently to customer requirements and the more they can expect to grow. Companies that don’t find a way to more efficiently produce and deliver parts in a time frame that conforms to customer expectations, on the other hand, risk falling behind their competitors.

As a result, more manufacturing companies are focusing on, and partnering with, their suppliers in order to achieve a stronger service focus. Strategic partnerships help manufacturers reduce the risks associated with inventory management and control; in-house fabrication; and capital and labor investments required to support faster, leaner operations. By offloading this risk, manufacturers can focus on their customers and what they do best: developing innovative products.

Brookville, Pennsylvania-based Miller Fabrication Solutions is among the companies working to align operations with real-time fluctuations in customer demand. In mid-2019, the original equipment manufacturer implemented a kanban system to regulate component supply through the use of visual signs to trigger an action. Typically, these take the form of hard-copy or electronic instruction cards.

For example, every parts shipment comes with an instruction card, or sign. Each part type has its own sign, which is sent along the manufacturer’s production line. When that set of parts is nearly depleted, the sign prompts the company to notify the supplier, which then ships new parts. The kanban system supports just-in-time manufacturing in a lean production environment.

The path to kanban

In 2012, as the Great Recession began to wane, Miller started seeing sales rebound to pre-recession levels. The company, having operated with slim staffing levels during the downturn, wasn’t prepared for the quick and significant growth. The metal fabricator was late on deliveries, and customers were communicating that the quality of parts was no longer acceptable. At the same time, Miller couldn’t hire skilled laborers quickly enough to meet demand.

Some of its suppliers attempted to help the company develop business and prioritize change in key areas, but customers couldn’t see adequate benefits from the alterations made in isolated buckets. Problem areas persisted even after some significant improvements were made.

Although Miller had anticipated that masterful planning and scheduling would allow the company to meet customer needs, things don’t always go as planned. A machine would break down, a quality problem would arise or the number of parts a customer needed might unexpectedly increase and there wouldn’t be enough stock to respond. Any of those changes could stop the upstream process. No scheduling system can account for every variable that happens on the manufacturing floor, and the company found itself in a constant cycle of overproducing or underproducing.

Miller brought on a consulting firm to apply lean, six sigma and business process management approaches. That relationship — which focused on standardizing work, streamlining parts flow and other improvements — launched the transformation. Over time, Miller leadership became involved in attending lean conferences and summits and ultimately traveled to Japan to visit a Toyota supplier and see its kanban system firsthand.

A key portion of Miller’s fabrication business is the production of nine types of turntables for boom lifts. Feeding into those nine turntables are 192 unique, single-level parts. At the beginning of the kanban deployment, Miller partnered with a supplier that provides parts for one of the turntables, identifying 18 parts and two production lines that would be included in this pilot project. Miller determined that the signal for replenishing parts would be driven by a simple, laminated note card system, with each corresponding card printed with its relevant part number.

The supplier agreed to daily replenishment of the component parts that had been consumed the previous day. By marrying the kanban card system, which tracked the parts used each day in the manufacture of the turntables, with the Miller scheduling process, Miller was able to alert the supplier to replenish the depleted parts. As a buffer, Miller maintained a three-day supply of each part.

Within a couple of weeks, Miller was caught up on the backlog of turntables. Production lines no longer ran out of the parts that were included in the kanban pilot project, and the company had eliminated overstocking. After 90 days and several more implementation phases, Miller incorporated all 192 component turntable parts. By late 2019, a third production line had joined the first two in operating under the kanban system.

Results and lessons learned

Before kanban was deployed, when parts ran out for one turntable but were available for another, Miller supervisors instructed employees to overbuild the second turntable so they could keep working. That response was inefficient for the company and frustrating for workers — and it offered no benefit for customers.

Besides now being able to ensure, in tandem with the supplier, that parts consistently are available when and in the precise quantities they’re needed, Miller’s kanban implementation has provided work clarity for employees. For example, welders can begin their shift knowing they will be welding three of a certain turntable type, then switch to welding two of another type and so forth. Based on previous work completed, Miller now can rely on the sales and operations planning schedule to provide shop floor workers with clear, daily expectations.

Good scheduling results are not the only benefits derived from using the kanban system. Miller has seen work-in-process velocity drop from 10 days to seven, and overall inventory has been lowered from $2.3 million to $1.6 million.

Kanban has reduced the variance in machining production from employee to employee and has initiated a new way of thinking among departments and supervisors and between the company’s three facilities. One machinist discovered that work could be simplified by having grinders place a certain part in an opposite direction on pallets. This suggestion was accepted and rolled out on the shop floor.

Miller didn’t anticipate those types of interactions, but now highly values them. They have spurred the company to more intentionally connect departments to each other. The kanban system has opened the company as a whole to investigation and evaluation about how Miller might, in partnership with suppliers, better serve customers by becoming a leaner company from the plant level to the corporate level.

Having now used the system for nearly a year and expanding it across all nine of its turntables, Miller also has learned that modification of certain aspects of Toyota’s daily parts supply model can work effectively for its fabricator model. In some cases — especially for select parts that either are very large or very small or require long setup or cycle times — the company can just as effectively take delivery on a weekly, rather than a daily, basis. In those cases, parts are taken off the shelf each day and then, once a week, a signal is sent to the supplier to replenish.

Impact on suppliers

The industry’s mounting demand for greater efficiency and responsiveness is a big challenge faced by manufacturing companies and suppliers alike. To navigate this changing landscape, manufacturers and suppliers must work together more strategically to meet end-user needs. Suppliers that understand this new paradigm and are willing to engage with manufacturing companies in implementing kanban can be a key part of the solution. Specifically, they can benefit by

gaining a clearer understanding of customer needs
exposing and addressing problems within the supply system more easily
ensuring that limited resources are applied in such a way to provide only what customers want
enhancing market competitiveness
rooting and maintaining long-term, mutually beneficial customer relationships based on shared expectations.

The implementation of lean systems such as kanban are not necessarily an easy feat. They may make suppliers’ lives more difficult for a time because of the need to determine how to provide materials more frequently than they have in the past — perhaps even daily. However, the outcome can be well worth the effort. When customer requirements increased, Miller responded with a journey that ultimately strengthened operations, drove greater efficiency and focused the organization on continuous improvement.

How to Mitigate Supply Chain Corruption During High-Risk Periods

Wed, 27 May 2020 00:00:00 -0500

Supply chain managers are no strangers to bribery risk, which was already a problem in the industry before the global spread of COVID-19. Today, the extreme impact of the pandemic has created an unprecedented emergency situation for supply chains, as demand for some products has skyrocketed and halted for others. Suppliers of goods in high demand are scrambling to meet needs and fill operational gaps created by shortages, trade barriers, government-mandated shutdowns and reduced operations, while attempting to maintain the same standards of efficiency, customer service and quality.

Working with new third parties — intermediaries and partners — always generates risk. But, in the context of COVID-19, that risk is significantly heightened. Suppliers may be forced to quickly shift to new or unfamiliar markets to compensate for surging demand or breaks in their usual logistics flow. Supply chain managers may be tempted to trim anticorruption efforts such as third-party due diligence and antibribery training in order to expedite business operations. And as competition for high-demand supplies increases, as has already been exhibited by transnational races to secure personal protective equipment and medical supplies, bribes paid to employees of private companies may become more prevalent.

Effective crisis responses will not overlook the law, but will prioritize and invest in compliance from the outset. Conducting due diligence reviews of new business partners now can help avoid legal and reputational trouble in the future. Working with service providers that have been pre-screened against sanctions lists and have already made a commitment to transparency through respected credentials can expedite the process.

As the logistics industry faces extraordinary pressures, maintaining a culture of compliance is more critical than ever. Senior management should set the tone, announcing that anticorruption efforts remain a priority, and ensure the message reaches all employees and partners by mandating training, reinforcing the code of conduct, and reiterating that now is not the time to circumvent the rules — even if doing so would temporarily speed up business processes.

Additionally, a review of reporting procedures can act as a safeguard against corruption throughout operations. All stakeholders who interact with the supply chain should be aware of hotlines and other reporting mechanisms, which should establish a clear path and adequate protections for whistleblowers.

Finally, companies must not let their guards down as they enter new markets or seek alternative supply sources. As COVID-19 continues to hurtle through continents and nations, economies will recover in a staggered fashion. To keep up, many companies will be forced to shift parts of supply chains to unfamiliar markets in order to adopt existing infrastructure and operations. Even a high-level evaluation of corruption risks in a new market can provide insight into the red flags that will require particular vigilance. Geographical corruption analyses such as TRACE’s free, publicly available Bribery Risk Matrix, are a logical starting point.

It may be tempting to think that governments are too busy or distracted to invest time and resources in anticorruption enforcement — or that they will be more forgiving in the aftermath of this pandemic. It is possible that the opposite will be true: Supply chains will come under more scrutiny as they become increasingly entangled in politically sensitive issues such as national security and public health. Government officials and watchdogs will intensify scrutiny of publicly funded stimulus packages, tracking financial flows, and examining corporate books and records more closely. Additionally, law enforcement authorities in many countries have been granted expanded discretionary powers in response to the pandemic.

The risk of reputational damage should also remain a primary concern. The media is on high alert, and the public is watching how companies respond to this crisis, from personnel and administrative changes to human rights and anticorruption transparency.

While it is far too early to predict what a post-COVID-19 world will look like, economic fallout and increased competition for essential supplies are inevitable. In the long term, the public and private sectors may move to diversify supply chains, bring certain operations closer to home and stockpile reserve inventory of crucial goods. Those developments will lead to new relationships in supply chain operations, necessitating continued vigilance and compliance.

Rapid Experimentation Drives Results

Fri, 22 May 2020 00:00:00 -0500

In recent years, most businesses have shifted from a focus on data collection to struggling with how to analyze and organize overwhelming amounts of information. Using data to draw helpful conclusions is of course a worthy pursuit. However, sometimes the greatest results come from simple experimentation.

This concept is being driven home by COVID-19’s physical distancing challenges in large cities. Specifically, as health care professionals, essential workers and many others keep things moving for the rest of us, limited transit service is a significant hurdle.

“Everything we’ve ever learned about efficiently moving more people in as little space as possible has now been turned on its head,” writes Tiffany Chu in Forbes. “We must find new ways to achieve the goals placed on transportation service delivery.”

Chu cites numerous examples of cities using rapid experimentation to evaluate existing infrastructure, identify new ways to get people to work and adapt transportation systems —often with few staff members and constrained budgets. For example, after car travel plummeted, nearly 200 cities around the world responded with solutions that normally would have taken months or even years to implement. Some repurposed streets to make room for pedestrians and cyclists. Others expanded sidewalks in front of essential businesses.

“These solutions can use simple tools and low-cost materials like cones, barricades, signs, and movable bollards — and allow for planning and execution in a matter of weeks,” Chu says. “The creativity, adaptation, and unprecedented speed behind this will keep us safe and lay the foundation for a more sustainable recovery.”

Of course, this concept has applications far beyond our cities. To use rapid experimentation to advance your supply chain organization, she cites three considerations:

1. Prioritize areas of greatest need. Just as cities are focusing on vulnerable populations, supply chain organizations must prioritize ethical and environmentally responsible practices as we work toward recovery.

2. Build a thoughtful network. Many city leaders recognized that shutting down a street can cause crowding and risk public health, while opening streets helps residents get to and from essential locations more safely. Similarly, keeping the lines of communication open offers the greatest potential for outcomes that benefit all stakeholders.

3. Embrace the “temporary.” Instead of expensive civil engineering projects requiring heavy construction, cities are identifying what’s possible today. Supply chains can use pilots to explore, test, study and learn. Also, just as many cities are collecting community opinions on what works and what doesn’t, always seek feedback from your customers and employees.

Go for it

On a personal level, staying in our homes keeps us safe during this uncertain time. However, as supply chain professionals, we must get outside our comfort zones, take risks and innovate. ASCM is here to support you with industry-leading education, research and content. Tap into these essential member benefits to reinforce your bold steps to a better future.

Force Majeure: Has Your Company Reached the Breaking Point?

Thu, 21 May 2020 00:00:00 -0500

Editor’s note: David Steven Jacoby is CEO of Boston Strategies International, a supply chain and operations management consultancy. He is an expert in force majeure, a clause in contracts that essentially frees both parties from liability or obligation in the event of an extraordinary circumstance, such as COVID-19. Jacoby recently spoke with ASCM’s Tim Piotrowski about when and how to review customer and supplier contracts and what anticipatory actions can help mitigate risk.

Piotrowski: What is a force majeure clause, and what does it cover?

Jacoby: I would generally describe it as a “get out of jail free card” in a contract. It specifies certain circumstances under which the obligations in the contract are no longer enforceable. To that extent, it exonerates either party — it could be the customer, or it could be the supplier, depending on the wording — of its responsibilities under the contract. These clauses can be anywhere from a few lines to a few pages depending on the nature and scope of the agreement and the size of the deal involved.

If you're talking about a large long-term contract where force majeure can be anticipated to be a possible remedy, those clauses typically include various types of conditions that might qualify for exoneration of contract responsibilities. Some of those are social-related, like social unrest and worker unrest of various kinds. Some are weather-related, like fire, flood, heat, storms. Some are war-related.

If there's a war, basically, all bets are off. I've worked a lot in war zones and in conflict areas where these are discrete and real possibilities. Some of the clauses are economic force majeure, which involve supply chain breakdowns and price volatility, the extent to which it could have been anticipated at the signing of a contract. Then, there’s this thing called act of God, which is often ill-defined, but the classic example is a lightning strike.

Piotrowski: Based on what you are seeing with the current COVID-19 crisis, how have people and organizations been using force majeure?

Jacoby: Viruses and health epidemics are often not explicitly called out in force majeure clauses. This can be the distinction between the short clause that I mentioned earlier and the long clause. Here’s a case where, if you’ve had really good legal advice, and if you put effort into the contract, it would spell out and make explicit the potential for a health crisis like COVID-19 to be part of that force majeure clause. But most contracts did not anticipate this.

Piotrowski: If a supply chain organization’s current agreement doesn’t include a force majeure clause, what does that mean for me today?

Jacoby: There are a few things that you might be able to do. One is you could claim force majeure anyway. Force majeure is so well-known, it could hold up in court even if it’s not explicitly part of the contract. In that case, you’re going to need a lawyer, you might need to litigate, and it still might not hold up, depending on many, many factors.

The second thing you could do is attempt to use other clauses that may get you to the same place as if you had a force majeure clause. If you have anything in the contract related to work stoppages or conditions under which delivery could be curtailed, delayed or re-evaluated, those types of conditions might allow you to renegotiate the contract or even potentially get out of obligations while not specifically invoking force majeure.

Piotrowski: Do you always advise securing a force majeure clause when putting together a contract?

Jacoby: Any well-drafted contract should have a force majeure clause. I’ve dealt with many contracts, helped companies negotiate these contracts and helped them operate within the boundaries of these contracts. Honestly, all contracts of any scope and significance should have a force majeure clause. … If you have a contract, and it’s not in there, you should amend or even terminate and renegotiate the contract. Make sure it specifically calls out epidemics and pandemics.

Piotrowski: What are some ways supply chain organizations can protect themselves in a crisis besides invoking a force majeure?

Jacoby: One of them is to delay or defer purchases. If you don’t have the ability, or don’t want, to declare force majeure, you might be able to simply extend, delay or defer purchases. Look at some of the mandates coming from the government regarding mortgages and credit card debt and other types of financial liabilities. Basically, what a lot of them are doing is allowing a deferment of the payment. That’s become almost a commonly accepted accommodation for the problems caused by the coronavirus.

Some products are unavailable, but others are, so substituting product is another option. While it might not satisfy everybody’s needs, it might get you over the contract hump. You could also look for price-adjustment opportunities. If the contract in any way allows for indexation, or if you have a volume purchase agreement with breakpoints based on volume and price, they might come into play.

If none of those options gets you where you need to go, you could terminate the contract. In that case, see if you have a termination for convenience clause. If it’s not for convenience, you might still be able to terminate it.

Finally, I know this is kind of a Hail Mary, but you could declare bankruptcy if you need to protect from a very large liability that is an existential threat to your company.

Piotrowski: Is there any current data on how many supply chain organizations are using or will use force majeure and what that means for the industry?

Jacoby: I would say that May is going to be very busy for force majeure. It’s the fall after the reporting period. Most of the Q1 financial results were reported in April. Some will still drag out into May or even June. During that whole period, all these companies will be trying to endure the financial stress. We’re getting close to the point where companies will need to renegotiate or even break some very big contracts.

9 Essential Elements of Supply Chain Continuity Planning

Mon, 18 May 2020 00:00:00 -0500

COVID-19 containment efforts have severely affected supply chains nationwide, creating repercussions for original equipment manufacturers (OEMs) and supply chain managers across numerous industries. The pandemic serves as a reminder of the importance of proactive planning for manufacturing and supply chain continuity. In the grip of any crisis, those who have established thoroughly vetted continuity plans can more effectively sustain operations, maintain quality standards, consistently meet customer project deadlines and be poised to recover quickly.

OEMs tend to ask suppliers and prospective suppliers, as a matter of course, whether they have business and supply chain continuity plans. If the answer is yes, it’s essential for OEM decision-makers to follow up by thoroughly understanding what those plans entail. Otherwise, they risk their own ability to be agile in responding to implications from a crisis. Partners must work together to gain a clear understanding of what continuity plans encompass in order to ensure they cover a variety of potential risks — whether a pandemic, natural disaster, cybersecurity breach or some other devastating event.

Supply chain continuity plans should address, at minimum, nine key areas:

1. During the present pandemic, remote business operations have proven to be paramount. Supplier-partners should be virtualized and have remote work plans and policies in place, be able to explain how they will deploy employees outside of plant locations, and clarify how quickly they can implement these work processes. All personnel should be able to connect remotely to the systems necessary for them to carry out their job responsibilities. Suppliers should be able to detail the technologies they have installed to enable these connections, including ensuring that employees have laptops or other necessary devices, and their plans for supporting higher-than-usual demands on bandwidth.

2. Remote machinery operation allows continued operation and production without constant employee oversight. The supplier-partner also should be able explain how its personnel will address machinery operations that must be done on-site, such as manual loading and unloading of material.

3. A crisis can have greater impact on one location’s ability to operate than others. Therefore, suppliers that have multiple locations offer OEMs increased confidence that production can continue unabated. Ideally, recognizing that geographic areas also can be differently affected, suppliers will have facilities in more than one city.

4. Supplier-partners should be able to provide assurance that they have proper security across physical sites. Security measures should include, among others, fire and intrusion alarms, surveillance technology and/or personnel, as needed, and access control, which includes locks, key cards and device authentication.

5. Suppliers should have redundancies in at least four categories: alternate machinery, preferably at each of its locations; backup production suppliers; plans for supply chain shifts that permit uninterrupted flow of parts and materials; and complementary employee skills, with documented cross-training procedures for critical functions.

6. Cybersecurity is vital, as criminals frequently take advantage of crises to try to steal data or stall targets’ operations. Employees often are a preferred entry point, and the risk of data exposure may increase exponentially when employees work from home. Risk-aware organizations will have in place reliable firewalls, multifactor authentication, intrusion detection and other operating protocols to protect sensitive company and customer data. These businesses also will have implemented security awareness training that minimizes vulnerabilities by teaching employees safe online practices.

7. Recognizing that not every channel will be right for every situation and that some systems may rely on an unavailable internet connection, suppliers should have multiple communication systems in place to connect with customers, suppliers, employees and the community during a crisis. These may include email, phone, texting, signage, its website and social media outlets.

8. OEMs typically keep a close eye on revenue, cash flow and profitability. Given the importance of finances to business operations, they should pay attention to their supplier’s financial stability, as well. Strong financial performance, minimal debt and good lines of credit are indicators that partners will be able to weather a storm.

9. The list above is not comprehensive for every entity. OEMs and supply chain managers should diagnose other areas of risk exposure for their businesses, then research and implement strategies to mitigate them.

COVID-19 has served as a dramatic reminder that actionable business and supply chain continuity plans are critical. Equally vital is to periodically review and update plans as operations shift, new risks are identified, obsolete machinery is replaced and other business changes occur. Ideally, the partners will run annual simulations and checks of internal alert levels to indicate specific actions or procedures personnel would need to execute in a crisis.

To minimize project delays in times of uncertainty, OEMs and supply chain managers are well served to ask their partners for details about their business continuity strategies and request that they address any areas that aren’t buttoned up. When partners work together, they are most likely to develop mutually beneficial continuity plans.

Resilient Companies Need Resilient Workers

Fri, 15 May 2020 00:00:00 -0500

A recent article from McKinsey & Company proposes: “Imagine a crisis that forces your company’s employees to change the way they work almost overnight. Despite initial fears that the pressure would be too great, you discover that this new way of working could be a blueprint for the long term.”

Yes, telecommuting is a massive shift. But today’s workforce challenges are about a lot more than Zoom meetings and mastering the art of being productive from your kitchen table. Even before the global pandemic, emerging technologies were disrupting roles and responsibilities. In fact, back in 2017, McKinsey estimated that 375 million workers would have to either switch occupations or acquire new skills by 2030.

That dynamic, combined with today’s record-high unemployment and heightened awareness of supply chain, are presenting remarkable opportunities for our profession. Now is the time to build a superior supply chain workforce of the future. And that hinges on education, training, reskilling and upskilling.

McKinsey cites six key steps:

Identify the proficiencies your recovery business model depends on. Map out which skill pools will disproportionately affect it and drive it forward. To do this, identify crucial value drivers and employee groups. Specify their contributions to value creation, and reimagine how their day-to-day work will change as a result of value shifts. Identify the behavior and skills needed. Finally, specify the quantity and type of people you need.
Build employee skills essential to your new business model. Upskill the critical workforce pools that will drive a disproportionate amount of value in your adjusted business model. Establish a “no-regrets” tool kit — one that is useful no matter how an employee’s specific role may evolve.
Launch tailored learning journeys to close skill gaps. Obtain a detailed view of the core activities that critical groups will undertake in the next 12-18 months and which skills each of these groups require.
Start now, test rapidly, and iterate. Whatever education and training you do today should also be used to expand your capabilities tomorrow. By building your own institutional learning, and capturing what works and what doesn’t now, you position yourself to apply those lessons during future disruptions.
Follow agile principles and make bold moves quickly, while maintaining a clear view of your skill deficiencies in order to prioritize the gaps you need to address and select the right candidates for reskilling.
Protect education budgets. If you cut your budgets now, you’re only delaying the investment you will need after recovery. Don’t waste years when you could be developing resilience now.

Take the lead

On May 28, Kent Brown, supply chain practice leader at Korn Ferry; John Caltagirone, founding director of Loyola University’s Business Leadership Hub; Elizabeth Rennie, Editor-in-Chief for SCM Now magazine; and I will present the free webinar, Supply Chain Workforce of the Future. We will explore

why superior workforce development, talent management, and diversity and inclusion are essential to achieving resilience
how supply chain leaders can maximize this moment of understanding to close the talent gap
the key characteristics to cultivate in your employees, based on Korn Ferry’s digital survey, ASCM’s salary survey and Loyola’s academic studies
the importance of prioritizing a people-first mindset and an ongoing focus on ethical business practices.

COVID-19 has underscored the need for resilient supply chain professionals to lead their companies toward a better future. Begin acquiring some of these essential skills by attending this insightful event.

Gain Supply Chain Wisdom From the Experience of Others

Thu, 14 May 2020 00:00:00 -0500

Did you know that 70% of supply chain projects fail? And if the project involves software, the failure rate can go as high as 85%. There are countless reasons why supply chain failures occur, but some common ones include

difficulty making scope-related decisions
dysfunctional supply chain planning
supply chain metrics working against each other
inefficient resource management
unrealistic goals and deadlines.

So, if projects fail all the time, what happens when you're facing unimaginable uncertainty? Seeing a project through during a crisis is particularly daunting. In the face of COVID-19, supply chain managers may be wondering how their organizations will ever bounce back from the effects of the pandemic and what they can do to prevent a disastrous breakdown. The key is to anticipate and mitigate the potential risks, establish an effective strategy, create an exceptional plan, follow it up with a precise execution, and understand the recent trends and hacks.

One of the best ways to do all of that is by looking at historical examples and understanding what went wrong at other companies. Following are six stories of real-life supply chain project management failures. Each has a takeaway to make your organization even more effective in the future.

1) Adidas, 2019: Supply chain shortage: In Adidas’s 2018 annual report, it stated that sales growth for the company would be negatively affected in 2019 due to “supply chain shortages.” At a news conference, CEO Kasper Rorsted said, “The volume grew quicker than anticipated and we didn’t respond quickly enough to that demand signal.”

Maintaining balance in a supply chain is extremely important. Adidas failed to do its research and, therefore, couldn’t anticipate that demand for its products would be so huge. The takeaway here is the importance of understanding demand surges and having the agility to make necessary adjustments instantly. The earlier changes are made in the supply chain process, the easier it will be to meet demand.

2) Kentucky Fried Chicken, 2018: Abruptly changing delivery partners: In 2018, 2018 KFC changed its delivery partner, which didn’t go exactly as planned: This change led many of the food deliveries to be delayed. Customers were unsatisfied with the service and usually had to order from a limited set of options, as the stock in certain KFC stores was limited. Several KFC outlets were even forced to shut down. According to a press release by the company, KFC “brought a new delivery partner onboard, but they've had a couple of teething problems. Getting the fresh chicken out to 900 restaurants across the country is pretty complex!”

It is essential to know what changes you need to incorporate as a result of any decision made by you or your company. Changing from a special food delivery partner to a general delivery company, for example, can have negative results — particularly if, like KFC, you don’t focus enough on the transition. Always analyze the possible outcomes of making changes to your supply chain process; this way, you have an idea of what could go wrong and how to overcome the problem.

3) Target, 2015: Supply chain traffic jam: In contrast to the supply chain shortage Adidas experienced, Target faced a supply chain failure due to oversupply. Although their shelves were always stocked with products, they weren’t being sold at the same rate. As a result, in 2015, Target was forced to close all 133 locations in Canada. This cost the company a whopping $2 billion.

Maintaining an equilibrium between the supply and demand process is essential to keeping a company alive and increasing profit margins. Always do market and customer research before any major launch or expansion. To avoid overstock, consider deploying a project management software to help track and understand customer purchases and make it easier to understand the demand margin and order the appropriate amount of supplies.

4) Oculus Rift, 2016: Overpromising: In January 2016, Facebook introduced Oculus Rift, a virtual reality headset, and started taking preorders. The Rift was sold out on the first day. It was a significant achievement for Facebook, but what followed was a nightmare by customer service standards. Preorders were dispatched beginning in March, but by May, stock was limited again. Some who had preordered had to wait until the end of July to get their Oculus Rift.

When you take the preorder route, it is essential to match the supply and demand numbers and have a product timeline in place. Facebook’s customers were excited and expected the product to be amazing. But the supply chain process flawed, and delivery was hugely delayed. If a product cannot be launched within two weeks of the preorder date, this strategy is not a good way to go about increasing sales.

5) Yodel, 2009: Failing to meet demand: Yodel is the biggest parcel delivery company in the United Kingdom. After acquiring DHL, its customer base and numbers increased exponentially. By 2014, Yodel couldn’t handle the massive demand. During the high demand holiday shopping and shipping season, Yodel was unable to consistently pick up parcels from retailers, which resulted in a major setback in terms of customer expectations and brand value.

When taking over another company, it is essential to analyze all the aspects and ensure your company can handle the extra baggage. Yodel took over DHL without considering the added demand or increased customer expectations. From supply chain management to customer satisfaction, changes need to be customized to match the newly merged company.

6) Mattel, 2007: Reliance on offshore suppliers: One of the most infamous supply chain failures of 2007 was Mattel’s recall of 1.5 million toys. The company had outsourced its work to multiple suppliers, resulting in a substantial quality failure. One supplier, Early Light Industrial, was diligent about product quality ; however, the business had offshored one job — painting toy cars — to Hong Li Da, which did not use the paint supplied by Early Light. Rather, Hong Li Da used paint that contained lead, which can be fatal to children.

When it comes to supply chain management, companies must perform a quality check of each product before putting it in stock. Early Light did take all measures possible to solve this issue, but the damage to its reputation was done. You must know your suppliers’ entire process so potential risks can be anticipated and supply chain failures can be avoided.

Deploy the Solution

Supply chain is a domain that embraces positive change and continuously strives to improve its functions and performers. There are hundreds of thousands of supply chain projects running simultaneously around the world. They provide food and goods to a population of seven billion people who are struggling with the consequences of the pandemic and an uncertain economy. Because most of those projects are intertwined, the success or failure of one of them affects the others. Thus, today, more than ever, the logistics need to be flawless and system driven. As systems and networks become increasingly supported by well-planned strategies, the processes get more streamlined. This is the kind of preparation that will help a supply chain prevent a failed project when customers are depending on them the most.

David Miller is a technical writer with experience in project management software. Follow him on Twitter @davidmiller4312 or connect on LinkedIn.

Cracking the Bullwhip Effect

Wed, 13 May 2020 00:00:00 -0500

The COVID-19 pandemic is taking its toll on supply chains across the globe. As a result of changes in demand and consumer buying patterns, the bullwhip effect has rippled up and down our networks. What can industry professionals do to crack the bullwhip effect? First, we must remember that the focus of supply and demand is threefold:

1. Deliver quality services to a business’s final customer.

2. Acquire appropriate information about a product’s demand.

3. Provide the demanded product to the customer on time and with consistency.

In the past, production planning used forecast demand for products, derived from earlier patterns of customer use. Today, however, supply chains that have embraced digital transformation are changing the ways in which materials, information and financial flows are managed within the integrated business network — customers, retailers, wholesalers, distributors, manufacturers and suppliers. Now, demand is transferred from one set of participants to another.

In addition to global disruptions, such as the one we are experiencing currently, the bullwhip effect occurs when there is lack of information and communication among the participants, causing administration hurdles. Managers order inventory based on historical data to meet expected demand; to prevent going out of stock, suppliers also need some safety stock. This perception of the business of supply leads to demand variability and increases the chance of error in forecast demand, causing the bullwhip effect.

Through this distortion in forecast demand, the profitability and performance of the organization is reduced. Meanwhile, inventory holding costs increase, which may lead to stocking obsolete inventory. Therefore, to crack the bullwhip effect, it is important to understand where the inventory is; what is the actual demand; and, most importantly, that the forecast demand should be properly aligned with each level of the supply chain. With the help digital information flow, businesses can prevent the distortion of demand.

Causes of the bullwhip effect

As previously explained, the bullwhip effect occurs when there is a lack of understanding about demand among supply chain participants. People, therefore, must be trained to analyze the effects of the decisions they make in the ordering system so that they can identify any perceived distortion in the demand. Moreover, information and material delays might contribute to the bullwhip effect. When supply chain participants eliminate time delays, the demand amplification can be significantly reduced.

At each level of the supply chain, participants predict demand with the help of customers’ historic data or buying patterns. But, after orders move from retailer to distributor and distributor to producer, the forecast demands must be modified. The longer the supply chain, the more participants it requires at each stage, which increases the chance of unstable demand among participants. It also increases the chance of obsolete inventory when there is no visibility — or understanding — of actual customer demand.

The grouping of orders depends on the internal strategic policies and criteria of companies. For example, firms are more likely to order regularly, and in greater quantity, from a major supplier to gain economics of scale, to achieve a reduction in transportation costs, and to get discounts on a full truckload. However, larger orders create more variability and opportunities for order-cycle overlap, which increases the likelihood of the bullwhip effect.

To prevent order batching from creating the bullwhip effect, an organization can deploy electronic data interchange (EDI), a method for transferring data among different computer systems or networks and creating links between retailer and supplier. EDI can help reduce the cost of the paperwork by generating an order electronically and informing the supplier, who can stipulate delivery quantities based on how much inventory is sold versus how much is in the distribution center. This practice reduces the distortion of inventory information and leads to customers placing more frequent orders.

Often, when prices are low, retailers stock up products to proactively prevent demand uncertainty before any seasonal activity or price promotion. This technique can lead to the bullwhip effect, as well. However, now that many organizations are implementing vendor-managed inventory (VMI), both the shortage gaming effect and the order batching effect might be completely eliminated. VMI helps the retailer ensure that their end consumer gets the right quantity of stock. Having the right amount of stock isn’t just a financial advantage; it improves service level and increases repurchase intention. With a VMI strategy, the supplier can track customer demand and manage the replenishment of orders and deliveries across many customers by receiving and implementing information related to the points of sale and forecast demand. Likewise, to overcome demand spikes, retailers are prepared to communicate information to their suppliers about promotions or other marketing campaigns to meet the requirement of the on-time delivery of any additional items.

Supply variability, including machine reliability and quality problems, is another potential cause of the bullwhip effect. Outputs from unreliable machines fluctuate, and that fluctuation can trigger the variability of demands for the members of the supply chain that are on the upstream of that machine.

Finally, when demand exceeds supply, a rationing of products can occur. When retailers are afraid that their supply will not be able to meet the desired demand, they start to overestimate their real needs. For example, sometimes customers are allowed to cancel orders when their real demand is fulfilled, which leads retailers to rely on a small amount of information and get confused about the buying pattern of consumers.

The following considerations can also help crack the bullwhip effect:

When a company has a suitable control system, it allows its trading partners to meet customer-targeted demand. Because of the system’s controls, the guessing game of predicting upcoming demand might be removed from the supply chains.
Accomplishing activities on time is critically important. Decreasing the amount of time spent can reduce the effect of the bullwhip. Each process and operation should be completed in the shortest amount of time possible; removing non-value-added activities goes a long way toward achieving the objective of leanness in an organization. It also means that the organization is providing the product to its customers on time, which is highly valuable for the business and customers alike.
Visibility is another effective method; when each stage of the supply chain is clear to the other, including understanding at what level inventories are required, then tasks can be transferred easily. With the help of an appropriate information system to optimize inventory, there should be a limited level with each object in the supply chain, allowing organizations to provide the right product, in the right place, at the right time.
Another reason for large order batches is the high cost of transportation. Full truckloads are often much more economical than less-than-full truckloads. One remedy to this problem is the use of a third-party logistics provider (3PL). 3PLs have many customers and can combine orders of different customers, which makes it possible to order less-than-full truckloads for a lower price.
Synchronization, such as through the tactic of continuous ordering, is another alternative. This process enables organizations to integrate all functions within a supply chain and enhances the visibility of orders and deliveries, eliminating the bullwhip effect.
Bullwhip can also be cracked by an everyday low-price policy (EDLP). With EDLP, companies do not offer discounts but promise a stable low price at all times, which saves customers the effort of searching for the best price and experiencing cost variability. In practice, many companies use EDLP strategy to compete with other firms, decrease price fluctuation, and encourage frequent buyers while increasing the sales volume of retailers.
Forecasting cannot be perfect every time; many businesses cope with this fact by keeping buffer stock, a practice that can create the bullwhip effect. To avoid this, supply chain practitioners need to accurately identify the forecasted demand and collaborate their planning and forecasting activities with each supply chain participant, which facilitates better visibility through shared information. This eventually reduces variability in demand uncertainty and production planning, cracking the bullwhip effect and leading to better forecasting and lower safety stock.

While these methods are a powerful antidote to the bullwhip effect, supply chain is rapidly changing; sometimes, these strategies are not enough. Technology-driven solutions can make a big difference to real-time visibility. Let’s take a look at four new technologies that have been created as alternatives to the methods listed above and are viable options for analyzing and eventually eradicating the major sources of the bullwhip effect in supply chains:

1. Cyber physical system (CPS) technology processes and collects information in real time by connecting devices within a network, which magnifies the information base, increases information availability and enables visibility of material flows in the supply chain. With these advantages, the bullwhip effect can be reduced easily because CPS provides quality feedback loops, which eventually reduces the time delay and overall processing time in manufacturing. Furthermore, operational information created under this system should be shared and available, which improves demand forecasting.

2. Cloud computing enables flexibility and scalability of infrastructure and software for the entire supply chain, aiding in the implementation of available information and sharing information in real time across and within the supply chain. All this digitalization leads to time reduction and information consistency, reducing the bullwhip effect.

3. Artificial intelligence is one of the most effective and promising technologies to reduce bullwhip effect. It is renowned for improving demand signals processing and reducing time delay in supply chain by inferring and noticing patterns in data, which ultimately cracks the bullwhip effect.

4. Blockchain facilitates traceability and transparency of data among all trading partners in a network. By providing access to demand data in the supply chain, it is easier for parties to reduce the bullwhip effect and improve their planning accordingly. This technology removes the need of an intermediary and allows distributed information to be shared directly with interested parties, reducing information asymmetry and increasing trust, thereby permitting high data integrity and robustness.

Digital transformation has shifted the structure of organizations in terms of effective and visible management of the supply chain. And, by creating meaningful information systems across each element of supply chain, it increases the smooth flow of material, leading to the satisfaction of real customer demand and maximized profit. That is great news as we continue on the path toward recovery.

Honoring Supply Chain Heroes

Fri, 08 May 2020 00:00:00 -0500

I recently came across the hashtag #supplychainheroes while reading through ASCM’s LinkedIn feed. Talk about inspiring. The COVID-19 pandemic has flooded supply chains with obstacles unlike anything we have seen before. However, amid the deluge, industry professionals and their organizations are stepping up with some truly superhuman efforts.

Many business leaders have made the courageous decision to overhaul their normal operations in order meet urgent health care needs. One of these is John Carrington, president of Columbia, South Carolina-based 3D printing company ZVerse. “Just a few weeks ago, Carrington was looking at the stock market’s collapse, mulling over which of his 20-person staff to lay off and seeing investors bail on another round of funding,” writes Marcus Baram for Fast Company.

Today, ZVerse is a key player in the battle against the pandemic, and Carrington is hiring dozens of new employees to keep up with demand for millions of reusable face shields. “We started to get frantic requests from hospital administrators and even hospital CEOs, which is very uncommon,” Carrington says in the article. “The first request was from a local hospital that knew that we did 3D printing, which needed 5,000 face shields that same day.”

Carrington and his team finished the design within two hours. The following day, a county agency asked ZVerse to make 10,000 face shields. And the day after that, a hospital system requested 50,000.

Meanwhile, a few states away, more than 80 factory workers at Philadelphia-based Braskem America were volunteering for production plant “live-ins.” For 28 consecutive days, these team members worked to produce a critical material used in personal protective equipment (PPE) for frontline health care workers.

Braskem America makes polypropylene, which is used in medical gowns, disinfectant wipes and face masks. “The teams worked in rotating 12-hour shifts to keep production running to meet the surging demand, while remaining isolated on-site,” writes Julia LaRoche for Yahoo Finance. “The plants already include kitchens and locker rooms, so the company provided air mattresses, groceries, prepared food deliveries, iPads, and increased high-speed internet access for Zoom calls with family and friends.”

CEO Mark Nikolich told LaRoche that his first priority was to secure the health and safety of his team members. Braskem also paid employees for both 12-hour shifts, on and off, while they were on-site.

Just up the road in Jessup, Maryland, Acme Paper & Supply Director of Customer Satisfaction Maggie Duerr was running a warehouse that stocks everything from hand sanitizer to isolation gowns to disinfectant wipes. She has been integral in sourcing hundreds of thousands of PPE and other urgently needed products.

“When trucks roll in with only 50% of our order, because suppliers can’t keep up with demand, we allocate products to appropriate customers first,” Duerr told The Baltimore Sun, adding that health care, nursing home and school accounts are absolutely at the forefront.

“I am so proud to be in a different form of front line during this pandemic,” Duerr says. “But above all, we really want business to be back to normal.”

Highlight your heroes

When we think of heroes, we think of selflessness, courage, humility, compassion, extraordinary commitment — and now, people who are literally putting themselves on the line for the greater good. Do you know a supply chain hero who embodies these traits? Has your organization pioneered new methods and processes in order to produce essential supplies? ASCM is compiling stories of supply chain heroism to share on LinkedIn, Facebook and SCM Now magazine. I hope you will tell us your story using #supplychainheroes and #ASCM in your post.

Lastly, the ASCM Awards of Excellence recognize superior performance and dedication to advancing the field of supply chain management. The deadline has been extended to May 31, submissions are free, and you may enter in multiple categories. Submit an entry today to recognize a trailblazing corporation or outstanding supply chain professional.

Fill Your Cultural Reservoir to the Top

Thu, 07 May 2020 00:00:00 -0500

Every person and process can be improved. However, superior leaders know that the keys to success are attitude and approach. When greeting any new situation, we of course must be engaged and confident enough to believe we have the right solutions. But it’s critical to also enter with a mindset of humility, possibility and progress. Perhaps most importantly, the desire to learn and develop a team spirit enables leaders to deliver results. A leader’s attitude and approach can either fertilize or poison the soil, producing beautiful flowers or noxious weeds.

Not long ago, I had the opportunity to take on the role of manager at a Moen distribution center (DC) in Las Vegas. My team and I were tasked with improving safety, reducing costs through optimized material movement and raising employee satisfaction scores via improved work systems.

As I reflect on our six-year journey, the one distinctive characteristic that propelled our success time and again was the organizational culture we were creating. It enabled our work, fueled our achievements, and unlocked the potential of our associates — both individually and collectively.

Specifically, in the most important area of employee safety, our DC experienced three perfect safety years with zero U.S. Occupational Safety and Health Administration recordable incidents as a result of the initiative. Throughout the entire period, we had zero lost-time incidents — not a single associate missed a day of work because of injury. Secondly, we reduced cost per carton — the primary corporate cost metric for DCs — by 30%. This represented a substantial cost savings for Moen. Finally, in the area of employee satisfaction, survey scores went up by 34% and were among the highest in the company.

In the end, our DC was recognized with two prestigious honors: the Global Operations Excellence Award and the President’s Achievement Award, Moen’s highest recognition.

GUIDING PRINCIPLES

Following are the key philosophies and values we employed, which influenced our approach, priorities and decision-making:

People are the most important resource; treat them as such. Respect others as individuals, develop trust and respect, and be kind.
Use passion to fuel focus on customer service and achievement.
To cultivate mindsets of ownership and accountability, ensure performance metrics are in place.
Use a process focus to establish consistency and repeatability. This is vital to continuous improvement efforts.
Make plans, and go forward. Don’t let the pursuit of perfection prevent progress, but never be reckless.
Personal excellence has a team emphasis. A star player should make the team better, not resentful.

At the beginning of this transformation, we used a pyramid to visualize key performance indicators (KPIs). The measures were safety, process, quality and output. (See Figure 1.) However, it wasn’t long before we reconsidered our pyramid’s foundation. We came to realize that all aspects of performance are affected by employee relations — in other words, culture. It is the prevailing force that supports and, ideally, boosts every other metric. Therefore, we redesigned the pyramid with culture at its base.

An annual company-wide survey evaluated our team’s culture. We assessed responses across 11 categories. The first year of our journey, we scored a 59 out of 100. To address concerns identified in the survey, individual feedback was given, and focus groups were conducted. Then, our leadership team took action. By the project’s end, the score was 79 — a 34% increase and 22% above the company average.

A focus on culture yields benefits in both soft and hard performance metrics. It creates an environment in which employees enjoy coming to work. This, in turn, brings about improved safety, quality and productivity levels.

FLOODING THE CULTURE POOLS

Leaders must be just as diligent when furthering culture as they are when furthering other performance metrics. They should infuse culture considerations into every decision and initiative. The greatest leaders know how to leverage culture in order to unleash the kind of improvements that come naturally and freely from an energized team.

To motivate an organization, leaders first must inspire the people. Here, it’s all about how they present and implement ideas. This starts by always keeping in mind that we are all equal; we just have different roles. With this mentality, it’s easy for a leader to demonstrate genuine care and concern for people’s well-being. The single most important pursuit is to create an authentic connection with associates.

A major tenet is the concept of a touchpoint. At Moen, our leadership team talked a lot about how, with every encounter and interaction, we can have either a positive or negative impact. Leaders must look for and generate opportunities to have personal, positive interactions with associates. A touchpoint can be a simple action, such as greeting others with a smile and a friendly hello or calling associates by name. Offer a sincere thank you, send a handwritten note, or share a meal together. Give the gift of yourself, your uniqueness and your talents. Show your humanity and personality.

Another central aspect of culture development is adopting a servant-leadership mindset. Listen to associates, and act on their feedback. Keep their interests in mind, and think about ways you can make their lives better. Water is siphoned from the culture reservoir when associates see leaders who just work for the next promotion or strive for command and control by dictating, mandating and micromanaging.

A final consideration is knowing when to do things personally. Leaders must not delegate key activities, as these often are vital opportunities to interact with associates. Always seek opportunities to create moments and memories with others.

HOW WE DID IT

First and foremost, our teams focused on safety. As part of the safety program, all leadership team members were required to complete a certain number of safety audits each month. To set the example, I held myself to the same standards. Sometimes people would say, “Don’t you have more important things to do?” I would always answer, “I am doing the most important thing — safety first!” Our desire to keep everyone safe signified that we really care about our associates.

Next, we created vision statements, slogans and mottos to foster team spirit. Our quality slogan became “Moen’s Last Touch,” indicating that we were the final Moen associates to handle customer orders, so we needed to get it right. We even had an internal design contest to create our logo and awarded a prize for the winning submission. A championship banner was produced to memorialize every notable five Ss project. Pretty soon, we had a rainbow of pennants hanging from the rafters.

We implemented skill-based competency and pay-for- performance programs that offered career progression and monetary incentives for heightened productivity and quality. Most advances came from ideas shared by associates. This was highly encouraged. After all, these are the people who know better than anyone else what really is happening and how to make improvements. In the main hallway of the DC, we created a wall of fame with associates’ pictures and the levels achieved.

Quarterly leadership meetings were followed by team dinners, and monthly leadership luncheons were held for warehouse frontline leaders. There is power in sharing a meal together. Kevin Kniffin, professor of economics at Cornell University, puts it well: “Eating together has a long, primal tradition as a kind of social glue.”

In addition to the traditional top-down recognition pattern, associates were encouraged to acknowledge their peers and engage in random acts of recognition. We had lively monthly recognition parties, and once a year an associate who exemplified teamwork and a positive attitude would receive the Golden Link award.

In truth, we were constantly looking for things to celebrate because honoring achievements leads to positive motivation and continued success. We reveled in costper-carton reductions, quality enhancements, corporate feedback and any other notable news. My team enjoyed bowling outings, pie-eating contests, mariachi band performances, a holiday luncheon with big prizes and much more. During these celebrations, the leadership team mingled with associates and helped with planning, setup and cleanup.

TAKEAWAYS

Since the transformation, our team continues to excel, with two additional perfect safety years, another Moen President’s Achievement Award and ongoing improvement in survey scores. Looking back, I have landed on the following lessons learned and recommendations for rising your own company’s cultural tides: First, make culture a KPI. Second, ensure associates enjoy working for your direct reports — and that your direct reports are obsessed with improving company culture. If they need coaching, provide it. Similarly, employ people with culture development expertise. It should be an essential factor in hiring decisions. And, as a final piece of advice, ask yourself, “In what ways do I cause the tides to ebb and flow?” Then, figure out what you can do to make sure culture floods your entire organization.

‘A Little Bit of Flexibility Goes a Very Long Way’: Interview with Professor Ananth Iyer of Purdue University

Tue, 05 May 2020 00:00:00 -0500

Editor’s note: Ananth Iyer is senior associate dean and Susan Bulkeley Butler Chair in Operations Management at the Krannert School of Management at Purdue University. Freelance writer Holly Poulos recently interviewed Iyer about how coronavirus disease 2019 (COVID-19) is affecting the supply chain for retailers and consumers alike, as well as how recent panic buying has forced both large and small businesses to reevaluate how they manage day-to-day operations, reassure customers about inventory availability, and prepare for long-term ramifications.

Holly Poulos: How can retailers match consumer demand right now when they don’t have the usual data or other means for anticipating it?

Ananth Iyer: Customer demand is driven by rational customer balancing of A) their potential increased demand, B) worries about price increases, C) worries of when next they can go to the store and D) worries about shortages when they do go to the store. Retailers should work to reduce the anxieties associated with B, C and D.

First, stop classifying the customer as irrational. Instead, think of their decision-making as rational. That’s why I put in four separate buckets, because each of these is a different reason. If demand went up, you have to satisfy the demand. You need to buy more. That’s because either

people are using more hand sanitizer and hand soap or even toilet paper, because they have moved back home
there are worries about price increases
worries about whether stores will be open
worries about shortages.

Retailers can work to ease these customer concerns. Commit to saying, “Look, our pricing will remain fair. We’re not going to increase prices.” And actions speak louder than words.

The easiest way to solve the, “I’m worried that the store would have run out,” is for stores to be proactive. If stores are proactive, then customers see inventory in the stores and they’ll stop stocking up. Grocery stores should be out there reassuring customers that they’re in the business of satisfying customer demand and they’re going to try very hard to do it. That’s really what will ease some of these issues right now.

Poulos: What advice do you have for retailers that are having trouble meeting consumer demand for household goods following regular procedures?

Iyer: Retailers may need to be flexible regarding the brands they carry, the sources of purchase and use of online channels to fulfill demand. Each of the options require quick decision-making to ensure agility. Private label brands may be more easily available, but it is important to note that the grocery supply chain does have a lot of finished goods inventory, with past studies suggesting between 80 and 120 days of finished goods inventory of nonperishables across the supply chain.

But there are many other things to consider, and I think this is the part where it gets a little tricky. Many of the things that are focused on replenishing supply may well require things like extra shipping and full truckloads. Now’s not the time for [retailers] to pass along any price increases, because that will be viewed negatively. However, express shipping, taking full truckloads and scheduling third-party pickup with direct transportation may all involve higher logistics costs to increase availability. But that may need to be justified as part of maintaining or increasing customer goodwill.

There is a margin decrease that retailers may have to contend with. But the actual availability of inventory, I don’t think should be an issue, because manufacturers are still operating full tilt and distributors have lots of inventory. The key is the logistics of getting it to the store.

Poulos: A huge number of people are placing orders online. What should retailers keep in mind as they invest more heavily in e-commerce?

Iyer: First, if the focus is on customer satisfaction, e-commerce is great, because you get the product out there. The key is to do it efficiently. In some sense, you’re taking work that customers do themselves. When the customer goes to a grocery store, they do the work themselves. Whenever any retailer starts doing work that the customer used to do, then there are costs. The question is how to recover those costs.

Many, many retailers, thanks to Amazon Prime, have offered free delivery and free shipping and free pickup. All that free is actually expensive for the retailer. The one thing to think about is, “How on earth are we going to cover those costs? What are they going to do to get customers to pay in some form?” Usually, when you pay, you pay because of slightly higher margins. The prices go up to cover this cost; but you cannot increase [the price] during a pandemic. The balancing act for retailers is how efficiently they’re going to be to do this.

Some retailers, like Walmart and Target, have announced increased use of robotics and automation. Those may be ways to become more efficient, but those things can’t be done in a very short run. Yes, e-commerce is a great solution to satisfy the customer. But retailers need to actually recover those costs.

Poulos: For retailers that are nowhere near as large as Walmart and Target, what issues are they facing? How are small businesses offering services to customers stuck at home?

Iyer: For small businesses, the only way that they can be competitive is to understand customer data. The hope is that they have a relationship with their customers; they know who they are. If people come in and ask if there will be stock, small businesses can have a conversation. They may actually have more information regarding customer intent than larges businesses.

The key is to stay solvent, keep the flow going, keep people coming in. That would mean, in the short run, they may have to absorb lower margins, hoping that they can survive enough for the long run. They really don’t have the option for a lot of automation, but this may be the time for them to consider software tools — especially software-as-a-service — to help them keep track of their inventory, so they’re not missing anything.

Poulos: As a professor, what are you telling graduating seniors planning to enter the supply chain field?

Iyer: The key is how long it’ll take to get back to normal and what that new normal would be. Luckily, for now, we haven’t seen much of an impact on this year’s graduates. It’s really the next year’s graduates. … Those are the students who will face a very, very challenging market. We’ll see how that sorts out. What may end up happening is, if the market happens to be a little tough, we may see more students going to graduate school or getting additional qualifications, so that they’re ready for the job market.

There are many conditions that could change pretty quickly. The good news is I think the industry is being proactive. I’m hoping that the ports remain open, that the truckers remain operating and the store employees remain working — and nobody panics about catching anything because they went shopping for groceries. At the end of it all, I think both the supply chain managers and consumers will realize that a little bit of flexibility goes a very long way.

It’s Time to Put People First

Fri, 01 May 2020 00:00:00 -0500

This past week marked the 49th anniversary of the Occupational Safety and Health Act (OSHA), which sets and enforces baseline safety and health standards; guides employer responsibilities and reporting protocols; and provides workplaces with outreach, training and education. Since the passage of the act, working conditions have improved significantly, with approximately 600,000 lives saved. However, even before the era of COVID-19, too many people still faced serious danger, with falls, workplace violence, contact with equipment and exposure to harmful substances being the most common preventable fatalities. Of course, the pandemic is now presenting a whole new set of challenges.

People everywhere are agonizing over the choice between paying rent or protecting their health — particularly those who work in meat packing plants, which have become coronavirus hot spots. And now, President Trump has declared these facilities “critical infrastructure” in an effort to prevent shortages of pork, chicken and other products.

“The announcement provoked swift backlash from unions and labor advocates, who said the administration needed to do more to protect workers who often stand shoulder to shoulder in refrigerated assembly lines,” write Ana Swanson and David Yaffe-Bellany in The New York Times. “In many plants, workers cut and debone meat in tight conditions, share meals in crowded cafeterias and walk the same narrow hallways, making social distancing practically impossible.”

The United Food and Commercial Workers International Union says the Trump administration simply cannot order meatpacking employees to work without taking steps to protect their safety. This includes access to masks and other personal protective gear, performing daily testing, enforcing physical distancing and providing paid sick leave for infected workers.

“While we share the concern over the food supply, today’s executive order to force meatpacking plants to stay open must put the safety of our country’s meatpacking workers first,” says Marc Perrone, the union’s president, in a media release. “We cannot have a secure food supply without the safety of these workers.”

American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka echoes these points on Twitter: “Using executive power to force people back on the job without proper protections is wrong and dangerous. … We should not be focusing on when we can reopen the economy but rather on how we should reopen it to ensure the health and safety of working people.”

And Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, says in a media release, “We only wish that this administration cared as much about the lives of working people as it does about meat, pork and poultry.”

Protect your most valuable resource

A recent ASCM Insights blog post states that the most valuable asset of any business is a healthy and available workforce. The article, “Business Continuity in a Pandemic: Safeguard Your People and Partners,” by Fusion Risk Management Cofounder Bob Sibik, shares numerous strategies for adopting a people-first mindset. See this story and much more helpful content on ASCM’s free COVID-19 Resources Webpage.

People are the ones who fuel supply chains, who innovate and who are absolutely essential to a prosperous future. This is a critical moment to reframe how we think about our workers and empower them to help shape the circumstances of their daily lives.

Practice Good Cyber Hygiene to Protect Your Supply Chain During Pandemic

Thu, 30 Apr 2020 00:00:00 -0500

Cybercriminals are known to target the weakest points in any organization. Now, with the novel coronavirus sweeping the globe, organizations’ critical assets are at serious risk, as bad actors leverage the growing fear in order to gain access to employee passwords and sensitive data for nefarious purposes.

According to a recent report from Check Point Technologies, web domains associated with the coronavirus are 50% more likely to be from malicious actors. These cybercriminals are feeding off of the uncertainty in a time of crisis and using advanced tactics such as phishing to target unknowing users. The Federal Bureau of Investigation also released a statement warning constituents of an increased number of cyber attacks related to the coronavirus pandemic.

“Cyber criminals are opportunists that continuously evolve their methods of attack. And, as history has shown us, the more visible the situation, the more aggressive the cyberattacks,” says Nicholas Fischbach, Global CTO at web security firm Forcepoint.

Vital organizations are a prime target

These opportunistic cybercriminals have already begun seeking out both vulnerable users and organizations such as hospitals that would be devastated by a breach. According to an article from Health IT News, the World Health Organization, and the U.S. Department of Health and Human Services reported an uptick in cyberattacks — about double the norm before the pandemic. Other medical organizations, such as the Czech Republic’s second largest hospital, have reported cyberattacks while in the midst of testing for coronavirus.

As the health care industry continues to battle the coronavirus, they’re being tasked with simultaneously fending off cyber attacks. But, as the risk of these attacks increases during the COVID-19 crisis, so does the information security community. Some of the world’s most intelligent security professionals are volunteering to assist medical organizations in combating the influx of malicious cyber activity.

Preying on fear and anxiety

With the stress brought about by a worldwide pandemic, users may be more susceptible to letting down their guards when it comes to online threats. Today, more people are accustomed to seeing a variety of forms and portals asking for usernames, passwords and often payment information. Sophisticated cybercriminals and groups have become experts at crafting near perfect duplicates of legitimate websites.

Hackers exploit these vulnerabilities and play on society’s fears in hopes that their carefully crafted scams will be successful. “We are seeing trends of cyber attackers leaning into social-engineering that utilizes popular keywords — such as coronavirus and COVID-19 — to execute online scams, phishing and malware attacks,” Fischbach says. As the number of suspicious emails and web domains related to real-life events grows, users must remain vigilant and take the time to ensure authenticity and remain cautious about links, attachments, or inputting usernames and passwords.

Staying Secure

Information technology (IT) teams have been unexpectedly tasked with allocating budgets and resources to prepare the workforce to conduct their daily tasks remotely. Employees are accessing corporate resources and data in locations outside of traditional corporate networks and on devices that may not adhere to security policies, leaving them exposed and potentially vulnerable to the most basic of cybersecurity threats.

With this unplanned societal shift to a dependence on the digital infrastructure, user education is key to keeping an organization protected from cyberattacks. Just like social distancing and washing our hands, organizations and their workforces must practice good cyber hygiene during this outbreak. Following are three tips to help:

Use a virtual private network: You can’t fully trust your home WiFi network, especially now that users are connecting with new devices and applications. Organizations should enforce, at the very least, all users to access internal systems and online services using a VPN to securely connect to corporate resources over the public internet. This will provide a much needed layer of security to protect data.
Be aware of phishing attacks: Phishing attacks, specifically on corporate email, have dramatically increased. They typically use a disguised email as a weapon. Organizations must ensure that users know what to look for and be cautious about opening any attachments or clicking on links from unknown or suspicious senders.
Implement robust authentication: Multifactor or two-factor authentication are critical methods for remote work. As history has shown, passwords are one of the most heavily targeted entry points to any organization because users tend to recycle a set of common passwords. Only granting access to corporate resources after successfully providing two or more pieces of evidence to authenticate makes exploiting those logins much more difficult.

Long-term plans for business continuity

As a final note, be sure to proceed with caution even when the outbreak begins to subside and workforces return to the office. Cyber criminals are patient and stealthy, often establishing long-form attacks that allow them to fly under the radar for extended periods of time. “The first weeks back in the office are critical in making sure that an enterprise can keep operating,” Fischbach adds. “Look for any hints in security audit logs across the entire hybrid IT estate for possible attacks that might have been missed.”

Digital Watermarking Connects the Digital and Physical Retail Experiences

Tue, 28 Apr 2020 00:00:00 -0500

The 12-digit Universal Product Code (UPC) bar code continues to be a standard part of the retail experience. However, the information provided by UPCs — manufacturer and item number — is a fraction of what today’s consumers and supply chain partners are looking for. Fortunately, a new study shows that retailers are ready to move to the next level.

New technologies are putting data right at people’s fingertips and leading to heightened consumer expectations for product information. People want to instantly know an item’s ingredients or where its parts were sourced from, as well as the journey it took along the supply chain. They also expect a seamless checkout and returns experience.

A report from Digimarc, a provider of auto-identification and data capture solutions, notes that shoppers have become accustomed to “the endless shelf” of online shopping and now expect the same conveniences and product availability at brick-and-mortar stores. This is backed up by a survey from The Harris Poll, which found that 82% of shoppers get frustrated when items don’t scan properly and 86% say lines get backed up when cashiers have difficulty scanning.

Forward-thinking retailers and brand owners are finding new ways to streamline operations, improve accuracy at the point of sale, provide details about products, and reduce complexity for both shoppers and trading partners. One way they are doing this is with digital watermarking.

Make your (digital) mark

Digital watermarking is not new — it has been used in government security and banking for decades. But the science is now coming to the commercial marketplace. Digital watermarks can be printed all over a product’s packaging, yet are invisible to the eye. This is particularly useful for an item that has multiple bar codes.

The marks are read simply by pointing a scanner or smartphone in an item’s general direction — rather than having to hunt for a bar code. “The idea is to speed up supply chains and point-of-sale transactions,” writes Loretta Chao for The Wall Street Journal. “Companies will be drawn by the increased ability to control product information and other potential benefits.”

Chao adds that a detailed registration process is required for each item, which will enable users to ensure product information is consistent from origin to checkout, even if the item changes hands or is resold. Consumers can scan the product and immediately see the information registered by its brand owners and manufacturers.

“The need for more data is already evident on packages cluttered with proprietary bar codes to drive consumer engagement and enable more advanced use cases for retail, brand management and supply chain,” according to “Powering the Future of Retail,” a report by GS1 and VDC Research. “A single bar code symbology that contains all of this information, in addition to product identification, could provide benefits for every stakeholder along the supply chain. The newfound ease of capturing and sharing this data through a single interaction creates greater visibility and increases operational efficiencies.”

The report indicates a number of additional advantages from digital watermarking and related advances, which include

better inventory accuracy
seamless collaboration with trading partners
greater accuracy at point of sale
improved consumer engagement and opportunities for communication
enhanced customer experience by providing nutritional and sustainability information or interactive video
confirmation of product authenticity and reduce counterfeiting
traceability to safeguard consumers and execute faster and better product recalls
waste prevention by eliminating sell-by versus expiration date confusion
smoother returns
lower operating costs.

Change management

Barriers to widespread adoption will be affected by both cost and disruption to products and packaging. “Even those companies that adopt [digital watermarking] codes likely will use them alongside UPC codes for the foreseeable future,” Chao notes. “That is because many retailers, such as mom-and-pop grocery stores, would need to replace their hardware before use of the code can be more widespread.”

The GS1 and VDS Research report concurs: “The amount of change management required cannot be overstated: from the technology itself to associate and customer self-scanning training and competing priorities for capital investment in the face of rapid change. This is complex, important work that industry is undertaking.”

However, it seems like the biggest challenge will be lack of trust in data quality and partner integrity. The research urges brand owners and retailers to work together to bridge these gaps, strengthen their partnerships and better understand consumers.

Wilkie agrees, noting that widespread adoption will require substantial collaboration over several years. “There is no one single quick fix,” she says. “Industry stakeholders will need to focus on making sure that the data encoded is accurate and complete. While this transition is a serious undertaking with many moving parts, there is a majority agreement that we must change the status quo and make investments in our future.”

How to get started

Digimarc offers the following eight steps to ensure a successful launch:

Establish strategic objectives and key performance indicators to ensure maximum benefit for your business.
Identify all of the store media and artwork — private-label packaging, hangtags, labels, signage, displays, circulars and more — that you would like to enhance.
Define project scope, and identify all stakeholders essential for success. This includes brand suppliers, print suppliers and systems integrators.
Verify your retail scanners and retail scale environment and equipment is ready and enabled.
Assess your consumer and retail store mobile applications to ensure compatibility with your scanning engine.
Enable stores by adding the appropriate software to your devices.
Begin adding the technology to your identified media assets and artwork, in partnership with your production suppliers.
Train associates on the benefits of the tool.

“While the UPC bar code has served the retail industry well for 45 years, we need to consider the serious impact that technology and the consumer is having on the way we shop,” Wilkie says. “Consumers expect recalls to be more efficient, they want to know their food is fresh, they want to engage with the brands they love, and they want to check out and return items quickly. Winning consumer loyalty is enabled by providing more information and a seamless shopping experience.”

Prioritizing Ethical Business Practices in Times of Crisis

Fri, 24 Apr 2020 00:00:00 -0500

This past week, we celebrated Earth Day’s 50^th anniversary — and a very poignant one, as pollution levels plummet, waterways run clear, and wild animals reclaim parks and neighborhoods. The lockdowns triggered by COVID-19 have led to significantly reduced travel and shuttered industries, which — although at a tragic humanitarian cost — is nonetheless having a very positive effect on the planet.

These short-term gains are encouraging, but there is still a serious risk that the outbreak itself and the desire for rapid economic recovery will back-burner environmental concerns. “Climate talks have already been delayed and new policy initiatives postponed,” write Leslie Hook and Aleksandra Wisniewska for the Financial Times. “The convention center that was set to host the United Nations climate talks in Glasgow in November has been converted into a hospital for coronavirus patients. Governments and world leaders have attention for only one crisis right now.”

Still, many business leaders believe that the road to recovery offers a valuable opportunity to prioritize ethical practices. “The dawn of a new era of community and personal responsibility is upon us,” says Vanessa Barboni Hallik in Vogue. “As we take steps to recover and rebuild, we have an opportunity and obligation far greater than applying bandages to a flawed system.”

She cites recent headlines about canceled orders threatening impoverished garment workers in Bangladesh, at least one million of whom are estimated to have been fired or furloughed with no savings. Although the fashion industry has seen rising consumer consciousness and a greater appreciation for global citizenship, COVID-19 is underscoring the profound inequities that still exist in social and economic systems. Indeed, there is an irrefutable link between poverty and sustainability issues, with fashion being second only to technology for perpetuating modern slavery throughout its supply chains.

“The industry and our individual relationship with fashion has to change,” Hallik says. “If anything positive emerges from this crisis, it could be a timely reminder of our responsibility to each other and our planet, including, and perhaps foremost, those whom we touch with our everyday decisions and rarely meet.”

Forward-looking action

ASCM is proud to be joining forces with sustainability thought leader GreenBiz in order to explore and highlight the essential link between sustainability and supply chain. We will offer our expertise to advance the organization’s supply chain offerings while collaborating to create valuable content, events and networking opportunities.

In a recent GreenBiz article, author Kevin Moss urges supply chain professionals to really think about how we want to come out the other end of this outbreak. “The lens through which we are forced to take urgent action right now is the one business leaders can use to ensure the rush to resolve one emergency doesn’t accelerate the onset of another,” he writes. “Let this be the beginning, not the peak, of a corporate transformation journey.”

Moss says there are three ways to achieve this transformation:

Change business models to reflect what matters. Switch from selling more stuff to more people to providing services, reselling previously owned products and creating new kinds of jobs. “If ever there was a time to double down on the journey from a linear to a circular economy, it is now,” he says.
Emphasize social justice. The most vulnerable suffer disproportionately at times of crisis. By addressing inequality in their business models, companies demonstrate their commitment to health, safety and prosperity.
Invest in supply chains. Prioritize mapping value chains and assessing environmental risk. Having comprehensive and accurate data and engaging global suppliers will be essential.

Watch for details on our collaboration with GreenBiz in the coming weeks. And for more on supply chain’s critical role to play as we work toward recovery, be sure to visit our LinkedIn and YouTube channels on Tuesday to see SCM This Week.

Prepare Your Supply Chain for the Inevitable

Thu, 23 Apr 2020 00:00:00 -0500

Recessions happen about every nine years, and our global economy is due. As the coronavirus outbreak worsens globally, top analysts warn that recession is looming. Furthermore, U.S. economists point to two other indicators: an inverted yield curve (a negative comparison of 10-year and 2-year Treasury bonds) and precursors to monetary inflation, including low unemployment and rising wages. An August 2019 report by the National Association for Business Economics noted that 72% of economists surveyed believed that a recession is likely to occur by 2021. Likewise, The Wall Street Journal conducted a survey of private-sector economic forecasters, and more than 65% of those surveyed believed that the U.S. manufacturing industry is already there.

There isn’t much we can do to prevent recessions; they are a normal part of a functioning economy. How we prepare for that eventuality, however, is within our control. As explained by Bruce Arntzen and Nima Kazemi, researchers from the MIT Center for Transportation and Logistics, companies tend to become lax during the “good times” of a strong economy. The study, “Recession Readiness in Supply Chains,” compared business practices of 100 firms in 2007, 2009 and 2018 and found that organization leaders tend to stop worrying about a recession after a few years, letting best practices fall to the wayside. It is essential to take this seriously and shore up processes now so that an economic downturn doesn’t equal disaster.

HOW COMPANIES FAIL

During a booming economy, cash flows through a supply chain in several ways, explains Arntzen in an interview for MIT’s MicroMasters program. Money goes to the supplier, to the employees and to fixed business costs. It comes into the company from final customers. In such a scenario, everyone is happy.

When the stock market crashes, however, customers may instantly cancel new orders, try to withdraw existing ones and stop the flow of products into their business. They want to cease spending money immediately. But during a recession, cash is the most important asset a company can have. Without money coming in, that organization must turn to cash reserves. And if those are gone before the recession is over and spending begins again, survival is hopeless. According to a 2012 report by The Business Journals, more than 170,000 businesses closed between 2008 and 2010, during the Great Recession.

As previously noted, during periods of strong economic growth, companies often let their standards drop. Arntzen and Kazemi cite the following mistakes, which make it extremely difficult to prepare for a recession. They include

relying on “handshake” deals instead of contracts that clearly stipulate a business agreement
relaxing sales terms, including allowing invoices to stretch from 30 days to 45 or 60, thereby causing a lack of cash when it’s needed most
neglecting collections for payments owed
using exciting, high-tech materials or customized designs instead of standard materials in production
failing to conduct due diligence and check partner financial statements
bloating the workforce, buying or renting more warehouse space, or acquiring more facilities than necessary.

During the MIT graduate-level-course webinar, Arntzen also warned against allowing too many people in the organization to make purchases: “When the recession hits, everyone has the opinion, ‘Oh yeah, I know there’s a recession, but I just need to buy these extra few little things, and these few little things aren’t going to bring the company down. If you multiply that by everyone in the company, of course it brings the company down.”

START NOW

To avoid having to make a hasty pivot when the economy starts to falter, prepare now. Karin Bursa, executive vice president of marketing at supply chain planning and analysis solution provider Logility, says her customers who had a plan in place — and a playbook for its implementation — were the most likely to overcome a crisis. She recalls that, during the Great Recession, consumers saved money by switching from name-brand products to private labels. Of course, many private labels are produced by the same companies making the brand names. Bursa says smart decision-makers chose to make more private-label products, thus staying profitable, protecting their brand’s good name and giving cost-conscious consumers what they were looking for.

Bursa says the same concept holds true for the automotive industry: During a recession, consumers are more likely to delay purchasing new vehicles; so, manufacturers might choose to slow production of new cars and trucks and pivot to selling aftermarket parts and performing repairs.

Another important aspect of preparation is taking advantage of new technologies. The amount of consumer data available data in 2008 pales in comparison to what we have now. “Companies can leverage so much more data and gain so much more insight today,” Bursa says.

Businesses have access to more than just receipts and inventory; there are email lists, online search histories, social media connections and much more. Using artificial intelligence, automation and analysis software, supply chain organizations can effectively manage this influx of information — and use it to their benefit when preparing for an economic downturn.

In a 2018 report, Deloitte lists four steps companies should follow to prepare for the next recession:

Adopt technology and automation to leverage growth. Labor costs are going up while technology costs are going down — a perfect opportunity to restructure, elevate new and existing talent, and automate certain processes.
Build a “war chest.” As with the MIT study, Deloitte emphasizes how important cash is during a recession. The way to create that cashflow depends upon the business, but reassessing debt levels, making strategic investments and getting rid of underperforming assets are proven methods.
Embrace partnerships and find ways to combine related departments, including “overlapping supply chains and inventory management efforts, independent product development, and unconnected pricing analysis and markdown planning.”
Figure out why you matter. Consumers, retailers and wholesalers have a lot of opportunities to buy elsewhere. Give them a reason to choose your business. The researchers emphasize that you should be “crystal clear” on who you serve, how you serve them and why they should care.

Steve Minsky, CEO of risk-management solution provider LogicManager, asserts that a recession is a risk to prepare for, like any other. He suggests looking for personnel gaps and defining needed talent; identifying vulnerable customers; evaluating supply chain weaknesses, including issues with contracts, vendors and advisors; and reviewing potential security and privacy concerns.

“There’s a misconception that core business priorities, shifted by the recession, will bounce back after the recession is over,” Minsky writes in a blog post. “On the contrary, these priorities typically shift permanently as a result, which means preparing for this kind of change earlier rather than later will give you a sharp competitive edge.”

In an April 2019 audio interview for his company’s McKinsey Podcast, Senior Partner Sven Smit cites research findings on businesses that fared better during the Great Recession. The companies that survived the downturn — then thrived — had a few key things in common. First, they built the cash reserves mentioned previously. Second, they proactively cut operating costs, which the nonresilient companies postponed until after the crisis. “The resilient companies also worked hard at leverage, in particular through divestments. They got into a much better cash position that also allowed them to then invest in the future path. That was quite substantial.”

In other words, resilient companies act quickly, putting themselves in a stronger position almost immediately. Furthermore, they don’t lose their focus as the recession continues. This enables them to keep accruing gains while other businesses falter or fall behind.

According to consulting firm Bain & Company, warehouse club Costco made major financial gains in the last decade, despite the recession. Costco chose to restructure its stores to carry less variety of goods, shift the types of products on offer, and reduce storage costs by centralizing prescription centers and increasing its practice of cross-docking.

Costco also doubled down on the thing its customers care about most: discounts. The retailer followed consumers’ desire to switch to a high-quality store brand and invested in its private label, Kirkland Signature. According to Costco’s former CEO, Jim Sinegal, the mass appeal of those store-brand products and Costco’s low prices even led competitors, such as Procter & Gamble and Kraft, to lower their prices.

Bursa recalls a food and beverage client she worked with that survived and thrived not during a recession, but a similarly tricky period: an avian influenza outbreak. Continental Mills creates baking mixes, packaged goods and other food products. The bird flu affects chicken eggs as well as chickens themselves. Of course, eggs are a key ingredient in many baked goods. In order to avoid using potentially tainted product, Continental Mills acted quickly to find alternative sourcing. The company reformulated recipes to replace eggs with other ingredients that provide the same taste and texture. Company leaders also chose to narrow the product line, focusing on the most popular items to help them prioritize what was important to the customer.

“In just a few weeks, they would find a resolution for one of their key product groups, then begin working on another product group,” Bursa explains. “At the same time, they were reworking the production process.”

In the end, the company was able to reduce inventory obsolescence from $1 million per year to almost nothing, improve inventory turns by 20% and reduce forecast error in one division by close to 50%. That significant of a boost to a business’s bottom line — whether necessitated by natural disaster or recession — can make the difference in that company’s survival.

The ability to think and reformulate quickly isn’t possible without having a clear, documented strategy in place. As Bursa urges, “Don’t be caught without a plan and a playbook that forces your team to come together and think through the impact of each decision.”

Al Gore Talks Sustainable Business

Tue, 21 Apr 2020 00:00:00 -0500

Editor’s note: Al Gore is former vice president of the United States; founder and chairman of The Climate Reality Project; an independent director at Apple; and chairman of Generation Investment Management, an asset-management company incorporating sustainability values into the financial services world. He will join supply chain professionals from around the world in New Orleans, September 13-15, as the keynote speaker at ASCM CONNECT.

In 2007, Mr. Gore received the Nobel Peace Prize for informing the world of the dangers posed by climate change. An environmental, business and tech visionary, he is recognized as one of the world's leading activists and uniquely in touch with the opportunities and challenges associated with charting a new digital society. Time magazine called him “a businessman who is out to change the world.”

SCM Now Editor-in-Chief Elizabeth Rennie recently interviewed Mr. Gore about the digital revolution, corporate social responsibility in supply chains, key technological advances that can help organizations achieve sustainability goals, and more.

Rennie: You are known for being an environmental activist, but you are also a serial entrepreneur, founding companies such as Generation Investment Management, which is focused on another kind of sustainability — business sustainability. The ASCM Enterprise Certification is the industry’s first and only corporate supply chain designation that measures social responsibility, economic sustainability and ecological stewardship. What specific indicators do you recommend looking for when evaluating business sustainability?

Gore: I believe we are in the early stages of a global sustainability revolution, with the scale and impact of the industrial revolution, at the speed of the digital revolution. This revolution has the potential to reshape the world, transforming our relationship to businesses, to the environment and to each other.

As you noted, there's a range of criteria to define a sustainable company. A few important ones include the following:

Do its practices, products and services drive revenues, profitability and competitive positioning?
Does it avoid borrowing its current earnings from its future earnings?
Does it operate its business consistent with a low-carbon, equitable, safe and healthy society?
Does it not compromise returns, instead realizing the benefits and advantages of sustainable practices in its strategy?
And does it exhibit strong [environmental, social and corporate governance] factors, including diversity, worker happiness, et cetera?

Rennie: The networks that connect and enable these businesses are integral to their ability to be sustainable. What are some of the most promising ways you have seen this happening in recent years?

Gore: Companies are reinventing transportation through electric cars and buses and other forms of transportation; agriculture through more precise applications of inputs and alternatives to meat. Applying digital tools reduces energy consumption, better integrates renewable energy into electrical grids and retools workplaces for greater productivity. I see supply chain optimization as a critical pathway to better efficiency and, with it, fewer emissions and improved outputs.

Indeed, the drivers of economic change are not only integrally linked to sustainability factors, but will also continue to be increasingly dominated by them moving forward, ultimately driving investment returns. The entire spectrum of industry — ranging from mobility to food systems to the built environment — are being fundamentally reworked.

Rennie: In the pages of SCM Now magazine, we talk a lot about the power of procurement and recent fundamental shifts in expectations when it comes to corporate social responsibility. Whether you are a consumer buying the weekly groceries or a manufacturer selecting a tier 2 supplier, your choices send a message. In many ways, business leaders seem to be able to make more progress than political leaders. How can supply chain organizations propel upstream action through this type of engagement and transparency?

Gore: Supply chain organizations can develop stringent and achievable criteria for sustainability and emissions reductions, and then base business decisions off that criteria. They can choose to work only with organizations that are committed to solutions to the climate crisis and that have a business plan that accounts for the increasing strain that the crisis is putting on people and the planet’s resources.

Supply chain organizations can also encourage disclosure of [greenhouse gas] emissions that are responsible for warming our planet. Disclosure of emissions is critical to measuring and reducing emissions up and down any supply chain. It gives you better visibility into actions that suppliers are taking. And, perhaps above all, transparency always is critical to building trust across the value chain.

Rennie: Solar power and wind energy are fundamentally changing the marketplace and significantly reducing carbon emissions. In fact, according to the U.S. Bureau of Labor Statistics, the fastest-growing occupation is solar photovoltaic installer, followed closely by wind turbine service technician. What should supply chain organizations be doing to maximize the potential of these and other important advances?

Gore: It is true that the biggest source of new jobs is in solving the climate crisis. Over the past five years, solar jobs have grown five times faster than the economy as a whole. In addition to the growth you cited in solar and wind jobs, we can also create tens of millions of new jobs retrofitting buildings with LED light bulbs, better windows and better insulation — and those jobs would pay for themselves with lower heating and cooling bills in just a few years. Innovations in industry, including new business models based on the circular economy, are creating momentum in the private sector for a holistic rethinking of the way we do business.

Rennie: You are also a big advocate of regenerative farming. What can supply chain organizations do to highlight this opportunity for public policy makers, incentivize farmers and help the practice take hold?

Gore: I’m particularly excited about recent advances in regenerative farming, a new movement being led by farmers who are cultivating the land in a way that restores soil health and removes excess carbon from the atmosphere, thereby reducing the effects of the climate crisis. In fact, a recent analysis of nearly 64,000 acres of Midwestern farmland after the flooding in summer 2019 found that fields with more intensive conservation practices — like cover crops and reduced tillage — had a significantly higher success rate of plantings by improving water storage capacity in the soil.

Supply chain organizations can help advance these solutions by sending a clear message to the marketplace that sustainability and efficiency are required for business. That will incent potential partners to build clean energy technologies into their businesses. Additionally, I encourage all organizations to push for local, state and federal policies that reduce greenhouse gas emissions and that support renewable energy development.

Rennie: What did it mean to you to receive the Nobel Peace Prize for informing the world of the dangers posed by climate change — and more importantly, how have you used that honor to amplify your message?

Gore: Receiving the Nobel Peace Prize was especially significant for me because I had the honor of sharing it with the [Intergovernmental Panel on Climate Change], the world’s preeminent body of improving our understanding of the climate crisis. It also had a big impact on my ability to reach a broader set of audiences and recruit more people around the world to join humanity’s urgent imperative to help solve the climate crisis. For that, I am forever grateful.

Rennie: If you were still in government, what would be the top three items on your to-do list?

Gore: First and foremost, we are long overdue in ending the taxpayer-funded subsidies for coal and other fossil fuels. We need to reform our subsidies system away from bad practices and toward good ones, with flexibility to implement sustainable practices that make sense for each industry and region.

We also need to put a price on carbon. Every day, we spew 152 million tons of global warming pollution into the atmosphere as if it were an open sewer. For too long, industry polluters have been able to pour these dangerous emissions into our atmosphere without any consequence or any accounting of the impact on our health and well-being.

And we must develop policies that account for those disproportionately affected by pollution in minority and low-income communities across America. The statistics underscoring the disproportionate impact on these vulnerable populations should anger every American. Any policy that’s put in place, but especially any that address environmental protection, must also address equity and protection of frontline communities.

Former Vice President Al Gore will present his keynote speech at ASCM CONNECT, September 13-15, in New Orleans. Attend the leading supply chain conference, designed to connect you with the global supply chain community, industry best practices, new ways of thinking, and endless ways to advance your organization and career. Visit ascm.org/conference to learn more and register today.

Repairing the Disconnects in Our Food Supply Chain

Fri, 17 Apr 2020 00:00:00 -0500

As food banks struggle to meet demand and grocery stores shelves sit empty, farmers around the world are watching their produce rot, flooding thousands of gallons of milk down the drain, and breaking eggs rather than allowing chicks to hatch.

About half of all food produced is ordinarily destined for now dormant restaurants, school cafeterias, hotels, stadiums, theme parks and cruise ships. As the COVID-19 era transforms the way people eat, the effect of this massive shift is a distressing imbalance in the food supply chain.

“The supply itself is not in question, but matching that supply with demand and getting it to where it’s needed most is a new and urgent problem,” writes Susie Cagle for The Guardian.

In recent years, consumers have become much more mindful of where their food comes from and how it’s produced. Although many companies have been boosting their transparency efforts in response, the pandemic is underscoring many lingering gaps. Efforts to find, produce, track and reroute inventories of urgently needed goods are proving to be seriously impaired by this lack of visibility.

Adding to the predicament is that preparing, packaging and shipping food for a theme park or hotel is very different from a food bank or grocery store. This is largely because of variations in packaging, sizes and labels. For example, a butter maker might have to convert from small, single-serve packets to sticks; or a poultry producer that doesn’t have enough workers to portion chickens may begin selling whole birds.

Likewise, redirecting industrial-scale goods “involves more than a phone call or quick email exchange,” Jennifer Smith notes in The Wall Street Journal. I spoke with Smith earlier this week and explained that resolving the discrepancies between industrial and consumer food supply will require significant investment in transparency and visibility, in addition to the associated production, warehousing and logistics costs.

At the same time, the increasing number of farm, processing plant, warehouse, logistics and grocery store workers becoming sick with coronavirus is further intensifying the problem. The outbreak at Smithfield Foods, for example, has affected 230 workers — more than half of the cases in the entire state of South Dakota. “Employees often work shoulder to shoulder, and some companies have granted sick leave only to employees who test positive for the coronavirus,” Michael Corkery and David Yaffe-Bellany write in The New York Times. “That potentially leaves on the job thousands of other infected workers who haven’t been tested.”

Karan Girotra, a supply chain expert at Cornell University warned the Times: “Labor is going to be the biggest thing that can break. If large numbers of people start getting sick in rural America, all bets are off.”

The tools you need to make an impact

The unfortunate reality is that our current food supply chains are not equipped, aligned or well-positioned enough to make critical modifications. But ASCM is working to address these challenges with essential education, training, resources and coronavirus content that is continually updated. We are collaborating daily with subject matter experts to develop relevant information on our COVID-19 Resources webpage, and numerous free webinars are being produced, including The Coronavirus Impact on Global Supply Chains, Planning Through Unimaginable Times and Doubling Down on Supply Chain Digital Capabilities.

Finally, be sure to visit ASCM’s LinkedIn and YouTube channels to see my weekly video chat, SCM This Week, with SCM Now Editor-in-Chief Elizabeth Rennie. This Tuesday, she and I will delve deeper into the future of our food supply chains and how supply chain professionals like you can make a difference.

Coronavirus Escalates to Recession, but Swift Recovery Is Achievable

Fri, 10 Apr 2020 00:00:00 -0500

This is the first time in modern history that we have experienced a global recession that was triggered by a public health crisis. “The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be,” says International Monetary Fund Managing Director Kristalina Georgieva. She adds that, in order to recover in 2021, countries must prioritize containment and strengthening health systems.

Jay Shambaugh of The Brookings Institute agrees, noting: “While there are always problems in any economy, there was nothing fundamentally wrong in the economy that triggered this recession — no asset bubble popping or runaway inflation to be stopped. The shock is from outside the economy, and if the health shock can be controlled, good policy may be able to steer to a quick return.”

The keys to that return will be limiting the damage as much as possible and taking next steps as soon as safety measures permit activity to be resumed. To that end, James daSilva of SmartBrief offers the following no-nonsense advice for supply chain organizations adapting to an upside-down world, those facing near-term revenue reduction, and even those “barely hanging on”:

Spend time and money on talent and training. And do not lose great people, he warns.
How you market and sell needs to change. Now is the time to be visible. Check in with your partners and other stakeholders, and think about how you can help them, rather than sell to them.
If you need to make cuts, try reduced hours, furloughs and pay reductions first. This keeps people from fleeing and ensures you have the organizational and structural capacity for recovery.
Values and behavior still matter. “A values-based culture modeled by leaders remains a strength, especially during a time when your employees will be distracted and disrupted,” daSilva explains.
Be clear, show a path forward, and don’t pretend everything’s great. Clarity and specificity will help you create an effective plan for mitigating and overcoming the crisis.

Realizing recovery

“There isn’t much we can do to prevent recessions; they are a normal part of a functioning economy,” writes Holly Poulos in the brand new issue of SCM Now magazine. “How we prepare for that eventuality, however, is within our control.”

Learning from the experience of others is one solid strategy to keep moving forward. Poulos’s feature article, “Prepare Your Supply Chain for the Inevitable,” details stories of resilient companies from the automotive, food and beverage, and retail sectors that survived and thrived during the Great Recession and other crises. SCM Now also includes articles that explore how digital tools can help your organization compete under challenging circumstances and techniques to alleviate pressure during stressful times.

Our world is, indeed, upside down. But with the right strategies and mindset, we can achieve an equilibrium again. Start by reading the award-winning SCM Now magazine.

Cut Through the Hype to Enable Your Digital Supply Chain

Thu, 09 Apr 2020 00:00:00 -0500

In the age of COVID-19, building advanced supply chain capabilities is more important than ever. Customer requirements, corporate goals, market dynamics and available data are changing rapidly, and all can have a significant impact on best practices, talent and agility — especially in turbulent times. To be successful at developing your supply chain of the future, the four foundational dimensions of people, process, data and technology must be addressed simultaneously. Here’s how.

Optimization, algorithmic planning, advanced analytics, artificial intelligence, and machine and deep learning are terms used daily in conjunction with supply chain operations. But how do you know what might be beneficial to your company’s supply chain operations? And how do you start the journey to acquire and master advanced supply chain planning capabilities?

Strategically focused organizations with advanced supply chain planning and optimization capabilities are leading the charge toward digitally enabled operations. They did not become leaders overnight; rather, their journey to a digitally optimized supply chain was built systematically over time while developing the capability to quickly sense changes in the end-to-end supply chain and proactively respond with optimal decisions.

The first step is building a team to support your digital supply chain. Advanced digitally enabled capabilities add value; a strong team that can maximize these capabilities takes you to the next level. As you build your team, make sure to ask these questions:

Who should lead the effort to digitize your supply chain?
What skills does this leader need?
How do you define the roles to enable a digital process and culture (for example, supply chain analyst, database engineers, data scientists, etc.)?
Do you have the required skills available within the company, or will you need to look externally?
How should the team be organized to efficiently run the business while driving innovation?

Step back and determine if your organization can successfully meet current operational objectives at the same time you develop enhanced capabilities for the future. Often, establishing a supply chain center of excellence can help build the necessary skill sets and capabilities.

Next, rethink current processes to gain benefits from digital capabilities. Digitization involves gaining visibility and access to operational data across the extended supply chain. However, the way you use this data to solve problems and enable new capabilities is where real value is created. Be prepared to explore and discover how to maximize the benefits by solving existing problems and tackling new opportunities.

Make sure you have the right data. The volume of data is growing exponentially, and the majority of this information resides within business domains. To develop meaningful insights, supply chain data needs to be clean, consistent, comprehensive and current. Too often, the available data is difficult to analyze because it is split between multiple reporting tools and systems — or it’s simply bad data. Achieving robust supply chain data management capabilities requires

the establishment of organizational roles and business processes that continuously drive supply chain data management excellence
technology that supports key supply chain data management business processes
ownership of the process, data and technology by the supply chain organization.

The final foundational component to enabling your digital supply chain of the future is a strong technology platform. To accommodate the fast-paced, 24x7x365 supply chains of today, the platform should support rapid deployments, flexible user interfaces, agile process adjustments and scalability. It also should automate and streamline data management to facilitate structured and unstructured data acquisition, cleansing, management and visibility across the extended supply chain. Look for multi-horizon, multi-aggregation, multi-functional, multi-organization, multi-unit and multi-language operations. Additionally, advanced numerical and visual analytics support real-time analysis and best-practice adoption to enable robust planning and optimization capabilities from product design to customer availability. Finally, advanced supply chain systems should provide embedded and purpose-built artificial intelligence to automate the routine and augment advanced analysis and decision making.

3 Steps to Tracking COVID-19 Supply Chain Damage

Wed, 08 Apr 2020 00:00:00 -0500

It’s no exaggeration to say that the current pandemic is posing an unprecedented challenge to supply chain resilience. Broadly speaking, that disruption matters little compared to the continued loss of life; still, for businesses — especially those without significant resources — it matters.

In normal times, most CEOs don’t ask too many questions of their procurement specialists. Now, they are scrambling to find out every detail about their supply chain and how vulnerable it is. Our preliminary data suggests that companies may shift to partner with companies in countries seen as less affected by the outbreak. In fact, the number of due diligence inquiries in China by our clients dropped to 35% in the first quarter to date, compared to 53% a year ago; Mexico and Turkey are showing significant increases. This data isn’t comprehensive and doesn’t capture what’s going on inside of most companies, where executives are struggling to get more granular information from a siloed division that usually doesn’t have to offer it.

Ideally, supply chain contingency plans and processes for this type of extreme scenario will have been put in place years ago. For those that haven’t, here are three steps you can take now to protect your supply chains and minimize disruption to your business.

Assess. Before making any decisions, it’s vital to make an accurate and comprehensive assessment of your supply chain and its vulnerabilities. That doesn’t just mean checking up on your immediate suppliers; you also need to assess potential vulnerabilities further down the supply chain. Companies often have a pretty vague idea of who’s supplying their critical suppliers and don’t drill down beyond the first layer. At times like this, it pays to have in-depth talks with your suppliers to understand their own stress points and how you may be able to work together to ease them. It’s an opportunity to make sure your suppliers are being transparent with you and to understand that burying their heads in the sand is not an acceptable strategy.
Be systematic. A holistic, systematic process is necessary to cope with supply chain disruptions on this scale. Procurement departments may be used to put out the occasional fire, but the nature of this crisis is more like an inferno consuming the whole forest. While the big players tend to have strong systems in place, midsized firms often are heavily manual and relatively unsophisticated processes. They might email their critical suppliers with some questions, but that’s a scatter-shot approach that falls short of providing the full picture or an assessment of risks over time, especially if you’re dealing with thousands of relationships. The extent and nature of the coronavirus impact is changing by the day and needs to be assessed accordingly, analyzing the outlook over different time periods.

Ask lots of questions. Ask your suppliers a series of pointed, detailed questions that elicit clear responses backed by evidence. Send them a questionnaire that digs deep into potential vulnerabilities. Investigate their lag time, inventory, staffing contingency plans and current production capacity. Ask if their suppliers have missed any deliveries. Find out what may change in the next 30, 60 and 90 days. Most likely, they’re as concerned as you are and will welcome the chance to have a frank discussion. Plus, starting this dialogue opens the door to a more transparent relationship in the future — a meaningful advantage.

Business Continuity in a Pandemic: Safeguard Your People and Partners

Tue, 07 Apr 2020 00:00:00 -0500

Organizations worldwide have been reacting to the COVID-19 outbreak in many ways. Public health, appropriately, is the first priority right now. But the health of businesses and the global economy are also essential to public welfare. Thus, it is urgent that organizations review and update their business continuity plans and procedures to ensure operational resiliency.

The most valuable asset of any business is a healthy and available workforce. The pandemic has already resulted in a largescale move by organizations toward working from home in order to practice recommended social distancing. This is a major disruption to normal operations, but many companies were at least partially prepared and are already functioning with remote workforces.

As you protect your workforce and help ensure its continued productivity, it is important that you

establish a strategy that enables employees to continue to function without endangering them
have a plan to isolate your employees should the threat of possible infection arise
ensure your employees can effectively work from home
verify that you have the tools, technology, capacity and security measures in place to support a large, remote workforce
review your human resources policies to ensure employees will not be personally affected if they must be quarantined for an extended period
modify any policies as necessary to give greater flexibility to normal working arrangements
determine your priorities and minimum staffing requirements to support these, in case you need to function with a significantly reduced workforce
identify key employees and ensure other staff members have received appropriate training to comprehensively cover their absence
create a communications plan that includes providing regular updates, along with actions taken, to employees and other key stakeholders.

In a global economy, virtually every organization is connected to, or dependent on, another. You may not be directly affected by the pandemic, but a vendor at a critical point in your supply chain probably is. Understanding your dependence on entities outside your organization is critical. Are your critical third parties (suppliers, vendors, service providers) prepared?

To protect your operations and ensure continuity of services, it is important that you

map your dependencies to understand where disruptions might affect your value chains
review the preparedness of your critical third parties
identify single points of failure in your ecosystem.

When assessing the impact of a disruption, it’s important to recognize the amount of time before the actual impact occurs. So, as you review and update plans, conduct walkthroughs and exercises. This is the best method for identifying gaps, and it will give you the highest chance of success. Active participants will become familiar with the goals and objectives of the plan and begin to use it as guidance rather than a prescriptive list of tasks to be followed without applying rational thought. Practicing the execution of your plan ensures all parties understand their roles and responsibilities.

During your preparedness reviews, assess the tools used to maintain relevant information and execute plans. Old technologies and obsolete tools threaten even the best plans. Identify any deficiencies in the tools you have available, and create a comprehensive list of requirements. The sooner you begin to upgrade your tool set, the sooner you will be able to reduce your risk.

Communicate, maintain situational awareness, and provide current and accurate information. Your organization’s ability to respond to disruption hinges on the effectiveness of your planning, your tools and the training of your people.

A 5-Step Guide to Keeping Your Supply Chain Moving During the COVID-19 Crisis

Mon, 06 Apr 2020 00:00:00 -0500

In this time of unprecedented uncertainty and chaos, organizations are determined to keep their supply chains operational, which means navigating major shipping delays, panic-buying and factory closures. Here are five steps supply management professionals can take to protect their supply chains.

Step 1: Keep your team safe. As governments around the world execute increasingly draconian measures to keep their citizens inside, there’s simply no excuse for employers to not prioritize the safety of their teams. Anyone that possibly can, should be working at home. Travel must be restricted to the absolute minimum. Take extra health and safety precautions in the workplace to best protect those who do have to come in. This could include segregating employees, more frequent and thorough cleaning, or introducing a rota to control the number of people being in the office at any one time. Enable a smooth transition to remote working with collaborative platforms such as Monday.com or Slack.

Step 2: Set up a disaster response team. Supply chain management has always been a profession that thrives on collaboration and innovation. Now, more than ever, it’s important to harness the collective brainpower of your organization to respond and adapt to today’s ever-changing landscape. Supply chain professionals need to establish and lead a disaster response team, which that reports directly to the C-suite, to discuss crucial factors affecting the supply chain and what to do about it. The team should be an agile, cross-functional, decision-making command center.

Step 3: Know your weak spots and implement contingency strategies. Manufacturers in China are currently operating with 56% of their normal staffing numbers at 50% capacity, although there are signs that the Chinese economy will be the first to recover. As a result, lead times are increasing to almost double their 2019 average and organizations face the prospect of losing some critical suppliers altogether. To mitigate this risk, identify both the most critical and most at-risk links in your supply chain — particularly where products or services are procured from a single-source supplier. Identify new suppliers in alternate locations, at least for the coming months. Note: Before selecting a new vendor, clarify if you would be in breach of an existing contract if you moved. If you do sever ties with an existing supplier, be sure to recover any assets from them such as stock, materials or equipment.

Step 4: Conduct ongoing and thorough risk analyses. The scale and impact of COVID-19 is changing incrementally. This demands ongoing, close monitoring of your supply chain. Stay one step ahead of the next major border closure or city lockdown. Ignoring the early warning signs could be the difference between keeping your organization afloat or not. If your suppliers have requested changes to payment terms, have failed to deliver a service or product on time, are no longer communicating with you openly, or your market intelligence has informed you of a growing crisis in a particular area, now is the time to act. Be sure to forecast the financial impact of different contingencies to understand the long-term consequences of the choices your business makes today.

Step 5: Plan for the future. COVID-19 has given organizations around the world a stark reminder that their existing risk-mitigation strategies are not enough. While this is absolutely a time for agile responsiveness, it’s also an opportunity to take stock and make changes for the future. Consider the benefits of evolving your supply chain to a more fluid, diversified model, driven by factors including cost, demand, production and the likelihood of black-swan events. Digitization and technology have a key role to play: Automation, blockchain and 3D manufacturing can accelerate response time and drive supply chain efficiencies.

In closing, be realistic. Every organization is going to suffer financial and supply chain impacts from the COVID-19 epidemic. Attempting to maintain a business-as-usual supply chain is impractical and will only lead to burnout. Instead, focus on meeting critical business needs and maintaining supplier relationships.

Supply Chain Mapping — an Essential Step Toward Resilience

Fri, 03 Apr 2020 00:00:00 -0500

As the global economy tackles the ongoing COVID-19 pandemic, a whopping 70% of companies are still grappling with information-gathering and evaluation. These businesses are attempting to manually identify which of their suppliers have a site in a locked-down region, secure raw materials and components, and protect their network from further disruption. With essential data absent or unobtainable, response to the outbreak is reactive and unsynchronized, making the impact even worse.

However, those supply chain organizations that had the foresight to map their networks before the crisis emerged have much better visibility into what is really going on with their supply chains. “Instead of scrambling at the last minute, they have a lot of information at their fingertips,” write Thomas Choi, Dale Rogers and Bindiya Vakil for the Harvard Business Review (HBR) . “They know exactly which suppliers, sites, parts and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.”

The APICS Dictionary explains that supply chain mapping is “drawing the procedures or relationships that form an organization’s business process.” The best maps are as revealing as possible. They depict the geographical location of suppliers; supplier’s suppliers, all the way down to raw materials; manufacturing plants; warehouses and distribution centers; transportation routes; and major markets. They include information on activities performed at each site, alternative sites that can do the same, lead times, shipment frequencies, product mix and volumes, supplier delivery performance, and more. Many organizations also choose to incorporate disruption-related metrics in their supplier evaluations; some even require suppliers to participate in annual mapping efforts.

“Supply network mapping can be resource-intensive and difficult. However, there is no way around it,” the HBR article continues. “Companies will discover the value of the map is greater than the cost and time to develop it.”

Preparing for the unthinkable

ASCM continues to closely monitor the situation related to the spread of the coronavirus. Our team is constantly gathering resources and creating content to help you and your organization navigate this crisis, respond and prepare for the future.

On April 9, ASCM will present Planning Through Unimaginable Times, featuring Brian David Johnson, futurist in residence at Arizona State University, and Anthony Zampello, CPIM, CIRM, CSCP, an adjunct faculty member at Bentley University. I invite you to join them for a discussion about today’s most innovative risk-management strategies; the importance of international coordination, collaboration and information-sharing; methods for assessing your major sources of vulnerability; devising creative plans for the future; and much more. Register today for this insightful webinar.

Understand the Future of Retail

Thu, 02 Apr 2020 00:00:00 -0500

In the early days of the COVID-19 crisis, before the World Health Organization called the disease caused by the novel coronavirus a pandemic, the first effects many seemed to notice were about consumer purchasing: People were stockpiling toilet paper and beans. The latter is a logical pantry staple if you’re planning to cook more at home. Toilet paper, on the other hand, was one of the first indications that consumers weren’t just preparing for a potential illness: They were panic buying. Consumers were worried about a sudden lack of resources.

Logically, we all know that COVID-19 doesn’t create an increased need for toilet paper; it’s a respiratory disease. Consequently, as toilet paper — along with household staples that do mitigate the spread of illness, such as paper towels, hand sanitizer and acetaminophen — began disappearing from store shelves, other shoppers began purchasing them too. They feared supply would be completely gone by the time they needed it.

In the ABI Research whitepaper “Taking Stock of COVID-19,” the authors note, “Both manufacturers and retailers need to develop prioritization plans for customers, potentially with set limits.”

Ananth Iyer, professor of supply chain management and senior associate dean at Purdue University’s Krannert School of Management, agrees that setting purchasing limits is an effective strategy. He suggests the following tips for combating the effects of panic buying:

Stop classifying customers as irrational; they’re making rational decisions based on the information they have and the store shelves they’re seeing.
Demand is increasing dramatically, but meet those demands anyway. Customer use might be increasing due to our recent lifestyle shift, not just a matter of stockpiling.
Assure customers that stock is available in the supply chain. Offer rain checks if a wanted item is out of stock. This will reassure customers that their product will be on the next shipment.
Shift to private labels if they’re more readily available. Having a less-desired brand on the shelf is better than having no inventory at all. Again, customers are less likely to overbuy if they see inventory available.
Commit to fair prices. Panic buying is often due to a fear of price-gouging. If retailers keep their prices steady, the customer has less reason to buy all the stock at one time.

Other experts have noted that consumer habits are contributing to short-term supply disruptions. Therefore, getting goods and food to stores as quickly as consumers are purchasing them is the first logistical problem.

A story in the Wall Street Journal outlines how food manufacturers are trying to expedite the process of getting their products from the manufacturer directly to the grocery stores’ storage centers, instead of stocking their own warehouses first, cutting down the time in transit. And retailers are ignoring years of data tracking customer purchasing habits and buying as much as they can, based on how much the manufacturer can produce and how many of their customers are now requesting the products. The just-in-time model grocery stores had practiced for years is no longer viable.

Undoubtedly, the increase in sales requires an increase in workers to meet that demand. Amazon announced in a blog post on March 16 that it was working quickly to meet increased customer demand. “We are opening 100,000 new full- and part-time positions across the U.S. in our fulfillment centers and delivery network to meet the surge in demand from people relying on Amazon’s service during this stressful time, particularly those most vulnerable to being out in public.”

Today, while the coronavirus has spread to hundreds of thousands of people, there are still individuals available to fill these roles, especially as restaurants, bars and other nonessential businesses are forced to close. However, if the virus reaches millions of people, and more are forced to shelter in place or even stay in quarantine in their homes, they will need an alternative to visiting the local grocery store.

A McKinsey report, advising businesses on how to adjust customer engagement in the time of the coronavirus pandemic, describes the increased need for e-commerce. “People have dramatically shifted toward online shopping and ordering for all types of goods, including for food and produce delivery. Companies should invest more in online channels as part of their push for multichannel distribution. The investment should include ensuring the quality and delivery of goods sold online.”

A March 21 letter from Amazon CEO Jeff Bezos said, “We’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritize stocking and delivering essential items like household staples, sanitizers, baby formula, and medical supplies.”

Iyer suggests that small businesses, looking to compete with the big box stores, should consider their personal knowledge of their customers as an asset. They have a greater understanding of the customer’s intent, he says, and can stock their stores accordingly.

The McKinsey report also reminds businesses that, after the crisis is over, many consumers will not return to their pre-outbreak spending habits. For one, the economy will be a very different place, regardless of whether the stock market fully recovers. Many small businesses, forced to close for public health concerns, are likely to fold. Thousands of workers have been laid off and furloughed; even if the unemployment rate quickly drops again, service-sector workers may be more skittish about spending.

Secondly, depending on how long the period of self-isolation lasts — some epidemiologists are predicting 18 months of repeated periods of quarantine until a vaccine for COVID-19 is found — individual habits may change. Online shopping was already prevalent before the crisis; those shoppers who were still regularly visiting local stores may get used to buying their groceries, personal care products and medications online. Consequently, companies that have yet to invest in a mobile shopping app or a streamlined online purchasing experience should do so now.

In the ABI Research report, businesses are reminded, “To effect change, there must be stimulation of a magnitude that means companies cannot do anything but make bold decisions to survive.” As is clear from Amazon’s recent decisions, the major players in the economy are already quickly pivoting to meet current demands; now is the time for local and national organizations and supply chains to do the same, if there is any hope of weathering this crisis with the business intact.

In a webinar hosted by DHL and the Retail Industry Leaders Association, experts David Shillingford and Shehrina Kamal discuss how these consumer actions are affecting the supply chain today and will shape it going forward. They suggest that all the preventive and reactive measures retailers take now, including a move to online commerce, will be useful during future supply disruptions, such as hurricanes. It’s also a great lesson on the power of agility.

The main thing to keep in mind, however, is the health of the public, says Iyer. “Insufficient stock should be the least of any consumer’s worries, because we have an agile and efficient grocery supply chain that has fierce competition in most locations. This means that the entire supply chain is eager to satisfy demand, and it will flex to do so. Consumers should feel confident, and retailers have the opportunity to build goodwill by being partners in helping consumers deal with their needs.”

Surviving COVID-19 Through Digital Transformation

Wed, 01 Apr 2020 00:00:00 -0500

Supply chain disruptions, like the one we are currently experiencing due to the COVID-19 pandemic, will continue to happen. Just think about the last few years: a major fire in China; a devastating earthquake and tsunami in Japan; a volcanic eruption in northern Europe; several large hurricanes in the southern United States; an ocean carrier going bankrupt, stranding thousands of shipping containers; trade wars between just about every country; withdrawal or significant changes in trade agreements such as Brexit; and, to top it off, a pandemic that has kicked off the latest global recession.

I’m sure I missed a few, but my point is clear: Our global, complex, fast-paced supply chains can be disrupted in hundreds of ways, and that’s not changing anytime soon.

Transaction-focused enterprise resources planning (ERP) does not provide the capabilities needed to efficiently and effectively respond to major disruptions. ERP systems do a great job managing transactional data, but they do not provide early warnings to disruption or analysis through advanced analytics such as simulations and what-if scenarios.

Surviving major supply chain disruptions requires advanced planning and optimization platforms that enable supply chain organizations to prepare for the unexpected. Artificial intelligence (AI)-enabled, purpose-built capabilities can simulate the effects of disruptions to and end-to-end supply chain, highlight ways to mitigate these effects, and develop action plans to be quickly deployed. These platforms use end-to-end digital supply chain data and machine learning intelligence to quickly sense changes, alert users, suggest the best responses, and act. They strengthen decision-making capabilities by providing data and analysis during high-pressure situations.

Supply chain data

Of course, end-to-end visibility and automation/augmentation through advanced analytics and cognitive engines first and foremost requires comprehensive, clean, consistent and current master and transactional supply chain data. Once available, the platforms can serve it up in near-real time, in the format needed to support planning and optimization processes. To understand the size of the opportunity, just imagine how much data could be stored on 200 Million DVDs. That is the amount being created every day, and a good portion of it would be very useful in sensing and responding to supply chain disruptions — if you had access to it.

Supply chain agility

Another foundational capability is supply chain agility. Agility allows a supply chain to quickly respond to opportunities and disruptions in a profitable way. Supply chain agility is gained through capabilities that enable rapid identification of changes, fast decision-making, and optimal responses that maximize company benefits. Agility can be maximized by leveraging both human and technology capabilities. Humans excel at solving problems that require common sense; generalization; creativity; and dealing with ethical dilemmas, subjective actions and abstraction. Cognitive systems excel at locating knowledge, developing an optimal solution, eliminating bias, compressing process times and dealing with repetitive decisions. An agile supply chain can quickly launch new products, divert products from one destination to another, and respond to opportunities and disruptions.

Speed

Finally, in today’s “instant everything” business environment, a capability essential to surviving supply chain disruptions is speed: speed to identify the disruption, to analyze available data and come up with the best response, and to execute the required actions. Automation unlocks speed because it provides critical updates, trend changes, alerts, and decision-making and action execution. AI-powered platforms can automate the routine and augment a human’s innate common sense, creativity and subjective judgment abilities to make better choices faster. The time from disruption to optimal response can be reduced by a factor of 10 through automation and augmentation. Just think what that time compression could allow your company to do and how much value that could create by

changing purchasing and manufacturing plans days or weeks sooner
diverting inventory on the fly
locking up alternative supplier capacity before competitors even now about a disruption
taking critical cash flow and other financial actions to minimize business impact.

Key questions to ask

Finally, surviving the COVID-19 pandemic will push many supply chains, and the people who manage them, to their limits. Ask the following questions to jump-start your team discussions:

Do we have access to comprehensive, clean, consistent and current supply chain data from our supplier’s supply to our customer’s consumer?
Do we have a plan for adopting advanced analytics, AI and machine learning in our supply chain operations?
Do we have the ability to run multiple what-if scenarios to analyze how our supply chain will be affected by different types of disruptions?
Can we develop mitigation plans for scenarios that are most likely to occur?
Can we quickly sense a disruption in our extended supply chain, analyze options to mitigate it and execute the best response?

If you answer “no” — or even “maybe” — to any of these questions, it’s time to get serious about exploring and implementing digital supply chain transformation for a better, more intuitive future.

“Business as Unusual” — Global Health Supply Chain Leader Eliud Muriithi Shares Insights About the Coronavirus Pandemic

Mon, 30 Mar 2020 00:00:00 -0500

Editor’s note: Eliud Muriithi is director of commercial services at Kenya Medical Supplies Authority (KEMSA). KEMSA is a state corporation under the Ministry of Health whose mandate is to procure, warehouse, and distribute drugs and medical supplies. These supplies are provided for prescribed public health programs, the national strategic stock reserve, prescribed essential health packages and national referral hospitals. KEMSA also supports county governments in establishing and maintaining appropriate supply chain systems for drugs and medical supplies to health institutions.

Rennie: Most societies are not ready for a fast-moving pandemic like COVID-19, particularly vulnerable populations who are disproportionately at risk. What is your organization doing to ensure that these people — the homeless, the elderly, those living in multi-generational households — are identified and supported?

Muriithi: KEMSA is a public entity that supports the Government of Kenya in managing public supply chain on behalf of the Minister of Health. If I may start by what the Government of Kenya has done —the president himself has taken up the mantle by assuring that he appoints a national response committee on coronavirus. This committee, which is charged with the responsibility of coordinating interventions, were able to set up a National Response Center within seven days of establishment.

KEMSA also works closely with the Ministry of Health and other stakeholders to identify health products and technologies that are required in response to the coronavirus. HPTs, or health products and technology, have been identified; notifications have been made; and HPTs have been sourced from different suppliers, some of them internationally.

Rennie: The director general of the World Health Organization is asking for global unity to change the course of this pandemic. So far, this kind of solidarity has been lacking. Have you experienced any challenges in this regard?

Muriithi: We have had issues to do with importation of HPTs from different countries. Some of the countries have said, “No more export of HPTs,” because they want to address their internal needs first. We responded to our internal suppliers and ensured that we mobilized the necessary supplies required, especially in regard to infection prevention and control products — personal protective equipment (PPEs), such as masks, coveralls and goggles.

Rennie: What is your health supply chain doing to adopt a more unified, collaborative path forward in Kenya?

Muriithi: The president, as I mentioned, has put everybody in a gear where everybody thinks about the nation first; everybody thinks about the people of Kenya first. We are not thinking about ourselves, and that includes the private sector. Most important, all stakeholders are working in unison to ensure that everybody's contribution is recognized. We are not here to capitalize or make a profit, but to ensure that services are rendered.

The president called us to action, and we have been meeting as government officers. The private sector has been sitting down with us, as well, to ensure that everybody brings on board what they are able to. Those are some of the common fronts that are being done by different people to ensure that we are facing the pandemic not as individuals, but as a country.

KEMSA has mobilized the different suppliers of COVID-19 products and trying to communicate to them that here we are not doing business as usual; we are doing business as unusual for the common good of Kenyans.

Rennie: If the pandemic has a silver lining, it may be that it offers health care professionals from around the world opportunities to embrace creativity, collaboration, identification of weaknesses, and ensuring we are better prepared in the future. What is your health care supply chain doing to maximize these opportunities?

Muriithi: COVID-19 has given us an opportunity to relook at our health systems — not just ourselves, but the entire public health supply chain system — and ensure that we are able to respond to any pandemic or epidemic that arises. In essence, it’s relooking at the entire health spectrum: looking at health financing, looking at issues to do with human resources for health, looking at health supply chain issues. It is a 360-degree relook at our health systems.

Over and above COVID-19, there will be other issues arising in the future. This is a wake-up call for the world to rethink our manufacturing. I think we over-relied so much on countries like China. We need to do things differently. We need to put mechanisms in place so that, in the event that something comes, we are able to respond. And we need to ensure that we have programs in place in anticipation of any emerging crisis.

Locally, we are talking to potential manufacturers about zeroing in on manufacturing certain products so that we are able to respond to our own internal needs. Because, if the pandemic was to continue — even if Kenyans are not affected — they will be affected in some way.

Rennie: What advice would you give to supply chain professionals across the globe who are working to solve these problems right now?

Muriithi: All of us in the supply chain systems must ensure that we are in consonance with the expectations of our stakeholders. Looking at the pandemic, there is a potential crisis of stockouts of necessary essential medicines and medical supplies. There is every need for the international community to work together to ensure that support can be forthcoming.

Our government has been engaging with different governments to see how best we can get supplies from countries that are not as much affected or that have more supplies because they are manufacturing. It calls for common fronts and not just for the local governments, but all the international community, to work together to ensure that we are fixing this pandemic as a family of the living in the world.

Elizabeth Rennie is Editor-in-Chief for SCM Now magazine. She may be contacted at erennie@ascm.org.

Rapid Responsiveness and Innovation

Fri, 27 Mar 2020 00:00:00 -0500

As people everywhere confront the terrible effects of coronavirus, supply chains are adapting and stepping up to ease the impact. In addition to countless manufacturers producing around the clock for essential industries, many are retooling to provide first responders and health care workers with vital equipment. Others are reaching communities affected by the outbreak by manufacturing supplies, donating space for hospitals and much more.

Above all, health care systems worldwide are experiencing a severe shortage of ventilators. Companies including General Motors (GM); Vauxhall, a unit of France’s Peugeot SA; and engineering firm Meggitt are pivoting to build the life-saving devices.

GM and three of its parts suppliers spent last weekend brainstorming ways to boost production of ventilators at an Indiana plant that normally makes small electronic automotive components. The company is partnering with medical device company Ventec Life Systems for guidance. Vauxhall, which has ceased car production, plans to make ventilator components using 3D printing. And Meggitt is leading a group of firms that will produce tens of thousands of ventilators.

Meanwhile, the production of facemasks and other medical supplies — which had taken place mainly in China — is going domestic again. “It’s not enough to just stockpile,” Medicom Group CEO Ronald Reuben told The Wall Street Journal. “It’s very important to have your own local production.” His company has boosted the creation of masks across all of its global facilities.

In addition, nine American fashion and textile companies — including Fruit of the Loom, Hanesbrands and Parkdale — are collectively producing medical grade face masks. The effort to build a supply chain came together “virtually overnight,” led by North Carolina-based Parkdale, the largest yarn spinner in the country.

French blue jeans producer 1083 was approached by a group of doctors with written instructions for fabricating makeshift sanitary masks. Within mere hours, the workshop was churning them out.

Perfume makers, brewers, distillers and others are supplying hand sanitizer, something that has been missing from store shelves for weeks now. Givenchy and Christian Dior have switched from fragrances to sanitizers.

Anheuser-Busch is producing and distributing sanitizer under the guidance of the American Red Cross. French spirits giant Pernod Ricard SA is supplying alcohol for others to use in production and making its own sanitizer, as is The British Honey Company, which makes gin infused with honey. “An alcohol-based sanitizer is just vodka or gin at 70% [alcohol by volume],” explains Chief Executive Michael Williams.

Finally, with tourism plummeting, airlines are redeploying fleets to ensure the flow of essential goods. Deutsche Lufthansa AG, which has suspended 95% of flights, will make deliveries using grounded passenger jets. And two luxury hotels in Israel, Dan Panorama and Dan Hotel, have been repurposed into quarantine shelters.

ASCM is also responding

With so much uncertainty, it has never been more important for supply chains to be flexible and creative. Physical storefronts may be closed, but businesses can and should find new avenues to serving their customers. Here at ASCM, one way we are doing this is by offering our members and the supply chain community free online education.

Now through April 30, you will enjoy complimentary access to APICS Basics of Distribution and Logistics within Principles on Demand. This curriculum introduces the foundations and operations of distribution channel design, inventory management, packaging and material handling, transportation management, warehouse management, and much more.

This is a simple way ASCM can help supply chain professionals as they strive to mitigate the disruptions caused by the pandemic. Take advantage of this valuable offering today.

Prime Your Supply Chain for What’s Next with Digital Tools

Thu, 26 Mar 2020 00:00:00 -0500

It’s not just events like the coronavirus that lead to chaos; it’s the way people react to them. Who would have ever thought a virus could cause sever demand spikes for toilet paper?

Unpredictable behavior in response to macro events creates demand volatility in every link of our global supply chain. As the bullwhip effect demonstrates, it only takes relatively small fluctuations in supply or demand to create massive bottlenecks. Huge, unexpected demand changes can bring unprepared companies to their knees.

British economists John Kay and Mervyn King describe the situation we are facing now as a time of “radical uncertainty.” In the face of such vagueness, today’s companies need to be ready for anything — and not just one thing, but a range of possible outcomes. Getting ready for anything isn’t just about responding to negative crises, but also about being equipped to seize opportunities. For instance, there currently is an explosion in demand for bidets and shatafas, the “toilet showers” commonly used in countries including India and Thailand. If suppliers of these normally slow-moving, niche items had been unprepared for demand surge, they could have benefited from this shift in consumer buying behavior.

Ready for the new normal

Many companies are so immersed in their current problems that they haven’t begun to think about what happens when the crisis moves to its next stage. Manufacturers and retailers of nonessential items must prepare to get hit with a massive spike in demand. On the other hand, those offering toilet paper and hand sanitizer are likely to see an extended period of flat demand while consumers and resale channels burn through their stockpiles.

These spikes and troughs will have implications on forecasting, replenishment and distribution center operations that need to be planned well in advance to ensure the right inventory and staffing levels. Sales history — so critical to forecasting and inventory — is no longer reliable. Instead, planning systems need mechanisms that recognize outliers and exclude them from forecasts.

There are three stages involved with this preparation:

Predict more behaviors. As mentioned, companies need to scenario-plan for a range of different outcomes. Improve forecast accuracy with digital tools such as automation to factor in the impact of a wide range of variables — order size, location, weather, seasonality, social sentiment, the impact of promotions and more. Machine learning combined with human fine-tuning is likewise valuable for continually improving the demand model over time.
Protect against surprises (good and bad). Even if you’ve built a robust demand model, no system can predict every random trend or act of nature. However, automated planning with advanced algorithms can help companies use inventory to hedge against the “unknown unknown” risk factors. Using these systems, companies can define service targets for different items and markets, taking into account business objectives such as minimizing working capital, maximizing margin and reducing obsolescence risk.
Perform more efficiently. Once your forecast is fighting fit, tune your supply chain to minimize waste, meet service-level and cost targets, and achieve other key business goals. This will involve positioning the optimal amount of inventory at every point in your distribution network. A planning software that uses advanced algorithms or artificial intelligence can help you orchestrate the vast number of trade-offs this involves.

Resiliency resolves doubt

After a crisis like the coronavirus, planning for the usual will be impossible. However, supply chains that leverage digital tools including automation, advanced algorithms and machine learning will be best prepared to manage this ongoing challenge and compete more effectively. Your number-one defense against this radical uncertainty is a resilient supply chain that’s ready for anything. The better you prepare now during this time of crisis, the better you will be able to manage in the future.

10 Trends that Will Drive Your IT Investments

Thu, 26 Mar 2020 00:00:00 -0500

Technology leaders and their counterparts must work together to ensure they are maximizing the value derived from both current and future technology investments. The following predictions are intended to help organizational decision makers devise a strong investment plan for the coming year through 2025.

By 2021:

30% of manufacturers will have a digital application unit that uses low-code technologies to create business-relevant applications without needing the coding skills required.
20% of manufacturing companies will have started to treat their assets as internal customers, leading to a 40% reduction in asset downtime.
Half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence, resulting in productivity improvements of 15%.

By 2022:

The need for operational resiliency with data-driven processes will lead 60% of manufacturers to shift their smart factory focus from technology implementation to process change management.
70% of manufacturers will use cloud-based innovation platforms and marketplaces for cross-industry and customer co-development, creating 50% of new product and service ideas.

By 2023:

65% of the global manufacturers will realize a savings of 10% in operational expenses through process digital twins driven by the internet of things (IOT) and machine learning routines that factor in unstructured data sets.
60% of Forbes Global 2000 manufacturers will address growing industry talent shortages by making significant investments in intelligent robotic process automation.

By 2024:

40% of OEMs will leverage field asset IOT data to intelligently diagnose pending issues and resolve autonomously reducing unplanned downtime by 25%.
75% of all consumer-facing manufacturing companies will have materially transformed their supply chains to manage customization at scale, resulting in share gains of 2-3%.

And by 2025:

Driven by increased requirements for sustainability, 30% of manufacturers will be using blockchain and the IOT to provide reliable provenance, leading to a 90% increase in audit efficiency.

What’s next

To further maximize technology investment potential, keep the following in mind:

Talent, talent, talent — there is a major skills gap within supply chain that demands action. Put a process in place to capture the knowledge of your more senior employees, and provide workers with ways to collaborate and learn together. Talent can be your most valuable resource; make sure to constantly cultivate it across the organization.
Review your foundation — most manufacturing plants are lucky if they can connect to half of their assets on the floor. Digital transformation requires you to be ready for increasing levels of digitally enabled products and processes. This isn’t just about your applications, datacenters, and networks; it’s about core enterprise architecture and infrastructure decisions.
Create a single source of the truth — data within your enterprise and from connected products, supply chains and assets will increasingly be the starting point for new initiatives.
Focus on achievable outcomes — work with technology partners and focus your efforts on how technology helps solve existing business problems or anticipate future ones.
Invest in the short- and long-terms — look for technologies that provide efficiency and effectiveness today, yet enable capabilities that support your company’s digital transformation tomorrow.
Implement a partner ecosystem — no supply chain organization can transform by itself. Develop a network of partners to accelerate your information technology capabilities and serve the line of business. Great partners can help you move quickly, which is essential in today’s global marketplace.

5 Military Principles to Help Supply Chain Organizations in Uncertain Times

Wed, 25 Mar 2020 00:00:00 -0500

Uncertainty is one of the most destructive forces to plans and operations. Uncertainty builds fear, fear creates inaction, and inaction halts progress. Today, the uncertainty we are facing is fueled by closings, ongoing economic shocks, medical risks and an end that is not in sight. However, just as the U.S. military mitigates the effects of uncertainty through training and standard operating practices, military principles can help us all succeed and even thrive during the coming months.

To ensure that objectives are met consistently, the U.S. Military employs five basic tenets when conducting mission preparation, mission execution and leadership development:

Define the mission so everyone knows their purpose. Military planning begins with a mission statement that describes the who, what, when, where and why of how a plan will be executed. It is the one piece of information that everyone, from Private to General, understands to ensure the entire organization is working to the same end. During system and economic shocks, ensure that every employee knows their value, why their actions matter and how those actions fit the big picture.
Train everyone to the same high standard. Simply put: The best way to ensure people perform well in a crisis is to train them to perform well in a crisis. The U.S. Military’s training principle is to “train as you fight,” with a specific focus on execution. This ensures that all equipment, skills and responsibilities are centered around completing the mission in combat, in the dark, and in the rain. The rationale is that, if you can do the mission under the worst conditions, then you can perform successfully in reality. Define standards and conditions so training can be systematically evaluated and reproduced in different locations. Even in the midst of a crisis, training and retraining on key performance standards exhibits a feeling of stability and control when things appear to be spinning out of control.

Use Commander’s Intent to empower people to take initiative. Military planners use Commander’s Intent to help a plan maintain relevancy and applicability in a chaotic, dynamic and resource-constrained environment. Commander’s Intent is the description and definition of what a successful mission will look like. It details how the Commander (in other words, the CEO) envisions the battlefield at the conclusion of the mission. While it fully recognizes the chaos, lack of a complete picture, situational changes and other relevant factors that may make a plan obsolete when it is executed, it clearly shows what success looks like. This helps subordinates, guiding their initiative, ingenuity and improvisation as they work toward success even in a changing environment.
The After-Action Review (AAR) builds teamwork and improves operations. The purpose of an AAR is to conduct a fact-based and intensive review of an operation and determine what went well, what did not go well and how to improve in the future. The military employs the AAR process to improve the results of everything from supply convoys to data processing procedures to small-unit attacks. It brings everyone together, seeks to understand what happened and why, and then creates a training plan to correct mistakes and incorporate positive outcomes into future missions. Great AARs can be performed in 30 minutes, reduce employee isolation and cultivates collaboration.
Finally, maintain ethical behavior. When someone is overwhelmed, unprincipled conduct degrades performance and can even signal that all rules are off. Times of chaos are when leaders need to overemphasize their values and morality to ensure employees, customers and other stakeholders are served and protected.

Essential Demand Planning Strategies as Recession Looms

Tue, 24 Mar 2020 00:00:00 -0500

* This blog post is adapted from an article that first appeared in the Summer 2019 issue of the Journal of Business Forecasting, published by the Institute of Business Forecasting (IBF).

As the coronavirus outbreak develops, it seems undeniable that we are approaching the end of the current economic cycle and a recession is approaching. A recession is a meaningful event for most organizations, which necessitates that demand planning and sales and operations planning (S&OP) leaders prepare for the inevitable impact on our businesses.

I have worked three recessions during my career in demand planning, so I know a little about what to expect. I also know that each recession is unique. The recession of 2008 was different from 2001, and both were different from 1991. Some are bubble-influenced, like the housing bust of 2008, while others are simply soft-landing hangovers from rapid expansion like in 2001. Despite differences in the underlying causes, there are common recessionary themes that affect the demand curves of most companies.

First, a recession will alter your demand curve. Your customers — whether large retailers or original equipment manufacturers — will cut their forecasts, reduce their inventory and become more pessimistic in their forecasting. Like you, they will not get the timing right, and the result will be fits and starts in their ordering patterns. And if you use point-of-sale data (POS) to help you forecast demand or estimate trade inventory, you will start to see a disconnect or a divergence between POS trends and orders from your customers. There will be a lot more noise in the data and a true demand signal will be harder to discern.

So why the noise? Well, if history is a guide, activity relating to discounting and other retail trade will increase, and customers will offer more frequent pricing reductions or other ways to stimulate demand on either the virtual or physical shelf for the value-conscious consumer. Of course, your competitors will do the same, and the result will be a much more volatile demand pattern, which will make planning for both supply and demand more challenging. As you try to navigate these rough waters, it will be helpful to openly discuss the potential impact of scenarios such as these. This will allow for at least some understanding of shifts in key performance indicators (KPIs), such as buffer inventories increasing to handle the greater demand volatility and forecast error.

During a recession, value becomes a dominant consumer theme. Cash stressed consumers will seek the best cost. Generally, this results in both private and store brands, as well as off-brand or commodity products, picking up market share as consumers and customer move towards value. From a planning and S&OP perspective, your units might stay the same, but your revenue may decline due to a shift toward lower-priced goods. And with a mix shift in the products consumed toward value, strategies for competing or participating with products offering better value to the end consumer should be part of your S&OP decision-making process.

Managing new products will present a challenge as consumers are less likely to expose limited financial resources to try a new product. When my employer launched a new hair coloring product in 2008, it began to flounder. Our initial demand sensing of POS results reflected a serious gap to expectations. We realized we had to take drastic measures, so we gave away free product, offering “free-bates” to help stimulate trial activity among our consumers. It worked.

Noting the economic downturn with historically high unemployment, we also focused our advertising creative on how this product might help in a job interview to directly appeal to the unemployed segment. This too helped drive trial and interest in the product. The key lesson is that, in anticipation of a sure-to-come downturn, it is reasonable to expect your customers or consumers to be hesitant to shift to — or even buy — new products without some compelling reason to do so. And to the extent possible, it would be wise to anticipate this type of dynamic throughout your new product planning processes.

It is not just the consumers that are averse to new products. Traditional brick-and-mortar retailer acceptance of new products will also be a challenge. These retailers tend to batten down the hatches, preferring to lean in to known brands and products and lower-priced store-brand or private-label offerings during recessionary times. Not only will this make obtaining new product distribution more difficult, but it is likely to result in some marginal items being delisted. Such activity indicates why examining risk in your product portfolio is central to planning before and during a recession.

Similarly, you are likely to notice a shift in your product mix. While lower-priced offerings might sell better, so too will larger-size/better-value offerings. Bonus packs, upsized offerings, on-pack couponing, multipacks and similar strategies will prove themselves to be smart, tactical alternatives for increasing consumer interest at shelf and for holding ground against private-label offerings. Being prepared for this potential mix of shifts — if only on paper — will help you improve your reaction time if and when response tactics are called for.

Finally, trade inventory will drop, if only because your customers will lower their forecasts. For example, if your customer keeps four weeks of supply based on weekly demand of 100 units, then normal inventory would hold 400 units. If the forecast is cut to 90 units per week, however, the inventory target will drop to 360 units. In short, you should be prepared to address unexplainable drops in your customer’s inventory that are not aligned with historical trends.

Immerse yourself in the past to prepare for the future

Recession hits each business in unique ways. To position your company to respond effectively, begin by burrowing deeply into all institutional data retained from prior recessions. Curate the facts into an economic narrative of sorts. Find old S&OP content and consensus reporting, or ask veterans of the business their opinions on the subject. These will all offer some guidance for the future. Incorporate all the dynamics of your firm’s reaction: an assessment of what worked (and didn’t); an evaluation of competitor activities and reactions; and maybe even a snapshot of economic indicators before, during and after the recessionary period. If you don’t expand your analysis to paint a complete picture, you will be short-changing your own research.

Next, reset your thinking. While most forecasters have a tendency toward a positive bias, force the stakeholders of your operational processes to look at plans with greater levels of scrutiny and skepticism. Use the results of your own historical data dig to enlighten the discussion. Make upside forecast moves based only on hard facts, not conjecture or opinion. Expect mix shifts in products. Use shorter trending metrics to forecast forward. Work on building different demand scenarios to estimate impact on the business, both top-line and bottom-line.

Examine your product portfolio. Are you thinking of launching a high-priced premium offering sometime within the next year? How will you propose to punch through the economic noise and gain acceptance of your product when consumer dissonance for anything new and expensive may be heightened during a recession? Do you have products already at risk that may go under during a recession, or is there some way to make such items more desirable to retailers or resellers from a margin perspective? Prepare your commercial innovation backlog with tactical options such as bonus or instant redeemable coupons, so you can be agile in the wake of declining economic results.

Use predictive analytics tools to see how your demand curve reacts to differing economic stimuli. Some of these products leverage large econometric databases. Prepare to align emerging economic factors against your own POS or shipment histories and look for correlations, latency and inflection points. Also identify products or product families that are counter-cyclical and may see an uptick and plan to leverage this dynamic. Understanding the leading economic indicators and their latency on your business will help you plan better in good times and in recessionary times.

Monitor key indicators of economic activity. During both the 2001 and 2008 recessions, my planning group provided an informal analysis of about 25 key economic indicators, from housing starts to unemployment to consumer confidence. We looked for the aforementioned correlation and latency impacts to determine what items were impacted by specific economic indicators and how long it took these results to manifest themselves within demand. Start tracking these indicators.

Start now

Bring all of these conversations to S&OP — now. Escalate the discussion about recessionary contingencies to the executive review phase of the S&OP processes. Create a one-slide summary of key factors likely to have the greatest impact on your business, and track them in each meeting.

When you’ve weathered as many recessions as I have, you learn what to look for and you recognize promising responses that have worked in the past. Some of the most interesting dialogues I ever had in the S&OP process occurred during difficult economic times. Act now to initiate forward-looking conversations about recessionary impacts. It is a fiduciary responsibility of the planning role that requires this difficult discussion.

Enhance Remote Team Performance in the COVID-19 Environment

Mon, 23 Mar 2020 00:00:00 -0500

Escalating concerns about the impact and spread of COVID-19 are causing major changes in the way businesses and society operate, nationally and internationally. As a result of major anxiety about health safety, businesses are taking precautions as they cancel events and ask employees to work from home. While remote workplaces are nothing new, the importance of effective, consistent communication in this environment is essential to maintaining productivity. Here are seven ways to boost remote communications:

Manage proactively. When managing remote workers, one of the keys to success is being proactive, rather than reactive. Clearly define roles and assignments to staff. Don’t wait for progress reports or updates. Instead, initiate communications regularly with staff of all levels to ensure projects are progressing, that employee workload is reasonable, and to understand when individuals require additional help or can take on more.
Maintain a culture of transparency. By initiating communications from the top levels of the organization, leaders model expectations and behavior that encourages employees at all levels to do the same. Interestingly, 85% of employees say they’re most motivated when management offers regular updates on company news. Share financials, personnel changes, new clients and ongoing developments. Keep all stakeholders informed of changes and projects to boost understanding and contribution.
Prioritize email and mobile communications. Since spontaneous and face-to-face interactions will be less frequent, increase reliance on email and mobile communications. There are 5 billion cell phone owners around the world, making mobile communications one of the most ubiquitous. Email reigns high as a method to get in touch at any time of day, directly to a person’s inbox, with the option of bulk sending. When 60% of work email accounts get checked one or more times a day, email serves as a vital communication method for a remote workforce.
Maintain an internal communications plan. Because internal communications can significantly influence employee productivity, make sure you have a current internal communications plan. Internal communications include employee newsletters and email communication, employee manuals and handbooks, newly produced and distributed press releases, webinars, and live chats. Ensure consistent communications are kept top of mind, especially during times when workers may be confused or concerned.
Use technology to your advantage. There are countless software applications built for communication. These can be messaging apps, video conferencing software, webinar platforms, social media distribution apps, listening marketing apps, customer relationship management software, project management software and more. In times when many workers are operating remotely, the use of these applications can greatly increase ease of communication and project management. If you’re unsure where to start, check out some of our recommendations in this blog.
Create and share a detailed schedule. When a large number of workers are operating remotely, it can be difficult to coordinate all the moving parts. By developing a shared schedule, employees will know how to stay on track, when to bring topics to a group meeting, which projects to prioritize and when to ask for help. Ensure your schedule is visible and known to all. Continue to adjust as needed.
Create a collaborative culture. One of the key factors to a successful remote team is inclusiveness, despite physical distance. Sometimes, this is easier said than done. To foster collaboration, be transparent and ask open-ended questions to get insightful input. Lead with the intent of listening, learning from and growing with your team. Allow traditional methods to be challenged and new ideas to flourish. Encourage staff to learn from each other and work together. Open communication across multiple staff levels creates collaboration, facilitates better understanding and produces innovative ways to enhance performance.

A time to pull together

COVID-19 is forcing many of us to avoid contact and remain in our homes as much as possible. This environment, however, doesn’t mean that we’re alone. With our digitally connected society, we can maintain community despite physical distancing. This isn’t a time to separate, but to continue to pull together, spotlight successes and focus on people. Use these tips to continue to prioritize relationships, communication and connection without sacrificing health and safety.

Responding to Demand in the Age of COVID-19

Fri, 20 Mar 2020 00:00:00 -0500

As the coronavirus outbreak develops across the globe, Amazon is reporting a surge of orders putting extreme pressure on its operations. To keep up with online shopping demand, the retail giant plans to hire 100,000 people and raise pay for workers at its warehouses and delivery centers.

“Getting a priority item to your doorstep is vital as communities practice social-distancing, particularly for the elderly and others with underlying health issues,” says Dave Clark, senior vice president of worldwide operations. “Our labor needs are unprecedented.”

With numerous governments encouraging people to stay in their homes, Amazon isn’t the only company realizing that it must ramp up hiring. Supermarket chain Kroger has immediate positions available in its retail stores, manufacturing plants and distribution centers. And in response to ongoing sold-out time windows, grocery delivery service Fresh Direct is adding drivers to take on additional slots.

“The workers who stock shelves; operate registers; and deliver meals, groceries and medicine are filling a vital role,” writes Charisse Jones for USA Today. They are becoming the linchpin that connects businesses to consumers.

Australian supermarket chain Woolworths has hired more staff in preparation of exclusive shopping hours that have been added for vulnerable populations, such as the elderly and people with disabilities. The grocer also recently required additional people to restock shelves stripped bare by panicked shoppers. In fact, Woolworths closed all of its stores nationwide for one night in order to fill them up again.

As urgency and fear propel people down the aisles, the frantic pursuit of groceries and household goods has been pushed to an intense level, writes Corina Knoll for The New York Times. She goes on to quote Walmart Chief Executive Doug McMillon: “The areas where we’re seeing pressure in the supply chain are surface cleaners, cleaning supplies, paper goods in particular. … Hand sanitizer is going to be very difficult to have 100 percent stock on for some time. We’re still replenishing it and shipping it, but as soon as it hits the stores, it’s going.”

Easing the anxiety

There is no doubt that the coronavirus outbreak is a rare challenge for supply chain professionals. As consumers continue to stockpile, and false demand signals are repeatedly triggered, we are experiencing the bullwhip effect in real time.

Thankfully, as the APICS Dictionary app points out, “The bullwhip effect can be eliminated by synchronizing the supply chain.” Indeed, after rushing to meet irrational buying and massive demand spikes, supply chain leaders must work together to prepare for new challenges ahead.

Potential approaches include modifying algorithms in demand planning systems, manually adjusting orders, managing demand planning with spreadsheets, and monitoring any new problems that arise as a result of tweaking orders. Gain additional strategies from ASCM’s new webpage dedicated to content and resources on the coronavirus pandemic. The page includes valuable content from supply chain risk management experts and ASCM leaders, and we are committed to updating it continually as the outbreak develops.

In addition, keep the conversation going in ASCM's Real-Time Impact COVID-19 community. This is an exclusive community where members can connect as we navigate the supply chain impacts of coronavirus. Ask important questions, share and learn from one another. I invite you to log in to the Supply Chain Channel and join the community today.

8 Tactics to Manage the Impact of Coronavirus on Your Supply Chain

Fri, 13 Mar 2020 00:00:00 -0500

Yesterday, ASCM hosted a webinar on supply chain preparedness in the face of COVID-19. Cosponsored by Supply Chain Canada, the event featured Jim Kilpatrick, global supply chain and network operations leader at Deloitte Consulting; and Gregory Schlegel, CPIM, founder of the Supply Chain Risk Management Consortium. These risk management experts discussed numerous topics related to the outbreak and its ongoing effects on supply chains around the world. Following are some of their key strategies. I hope they will help you and your organization navigate the crisis, mitigate any negative impacts, and position your networks to succeed as markets ultimately return to a normal cadence.

Those companies that were prepared — particularly with digitized supply chains — are of course more likely to fare better. However, it’s not too late to take meaningful action. Your first goal should be to ensure the safety of your people. Follow the Centers for Disease Control and Prevention guidelines. Give your workforce a constant, calm, flow of reliable information. Restricted travel policies are a beginning. Also implement screening protocols, increase workforce hygiene standards, and promote telecommuting and other flexible arrangements. Encourage people with preexisting conditions, who are more susceptible to the virus, to self-declare. Then, proactively shift them to remote work.
Identify key suppliers in affected areas. Stay in contact with them hourly and, if necessary, secure alternative sources of supply. If you are in a position to do so — particularly financially — reach out to your partners, understand who their suppliers are and ask how you can help. Accelerating a partner’s time to recovery not only helps them survive the threat, but also ensures your own future success. Work broadly to make a difference for others in fair and reasonable ways.
Without cashflow, you don’t have a business. To ensure liquidity, stop discretionary spending. Then, gauge your free cashflow through July 2020 at least. Next, calculate and manage your cash conversion cycle, taking into consideration receivables, days of supply plus inventory and days of supply minus payables days. Finally, if you have purchased supply chain disruption insurance, begin to exercise that policy as needed.
Depending on your business, some demand will shift to online channels. Maintain an integrated view of inventory, and segment or separate inventory for online versus retail. Ensure you have the capacity to handle the volume coming into your distribution centers, as well as last-mile capacity.
As previously mentioned, digitization is key to efficiency, collaboration and synchronization. To orchestrate your extended supply chain, use emerging technologies including the internet of things, artificial intelligence and machine learning. Digital supply networks help buffer risk with far less overhead. In addition, once your supply chain is digitally modeled, you can run discrete event simulation to see how your network reacts to certain stimuli.
Subscribe to a digital alert system. This software-as-a-service scans the world every 30 minutes looking for all types of risk events.
Keep in mind that we will eventually recover. To prepare for the rebound, communication and collaboration will once again be vital. As supply chains restart, everyone must be on the same page, especially with regards to what to produce first. Set priorities, and work as quickly as possible to get back in sync.
Continue making supply chain risk management a priority. Develop response plans, particularly for the most impactful risks. Keep monitoring your global networks, and have a playbook in place going forward.

Supply chains are stepping up

This is a moment that matters for the supply chain profession. It’s not only what we do, but how we do it. Deloitte’s Kilpatrick put it very well: “It’s easy, as supply chain professionals, to talk about demand shocks, assurance of supply and operations management. But at the end of the day, this is a people issue.”

ASCM is here to support you as you guide your people through this risk event and demonstrate supply chain’s vital purpose. If you missed the webinar, you can begin right now by watching the recording and gain even more strategies for success.

Close the Supply Chain Skills Gap with Reskilling and Upskilling

Wed, 11 Mar 2020 00:00:00 -0500

In our ever-changing world, we must be willing to adapt if we are to keep pace with new realities. As our environment evolves, so must the way we live, learn and work.

Industries evolve with technology, and that means the workforce needs to evolve as well. Supply chain is no exception. This field already has to contend with a number of technological and systematic advancements — and several more game changers are just over the horizon. Let’s look at a few of them:

Omnichannel distribution creates multiple interaction points for sellers and customers. It’s not just a store pickup or delivery world anymore. This increased complexity opens the door for even more consideration of artificial intelligence and robotic solutions.
Additive manufacturing, or 3D printing, also continues to alter the supply-and-demand model. An increasing number of products now can be created on demand, eliminating the need for extensive stockpiles. It also can improve spare parts availability for certain products, increasing their lifespan.
The manufacturing landscape is becoming leaner, more effective and more dependent on cutting edge technology — and that’s without even considering the near-future promise of shared people and freight initiatives and autonomous vehicles.

But in discussion of these various trends and advancements, one question remains the same: What about the workforce? What about the people? How do current supply chain employees factor into this leaner, smarter industry model?

For starters, let’s consider some of the more traditional roles. Automated and semi-automated trucking systems still are a work in progress. Estimates vary on when we’ll actually see the likes of dedicated autonomous trucking lanes, but they certainly won’t pop up everywhere at once. Human drivers are still in hot demand, and we actually have a shortage of truckers and an aging trucking workforce to contend with. The same can be said for forklift operators. Many young people just entering the workforce may not be attracted to these positions. However, they’re still a vital part of the supply chain.

Supply chain jobs in general are on the rise, and that includes a host of essential high-tech roles in data analysis, cloud solutions, supply chain planning and risk management. Supply chain employment is projected to grow in line with the national average of 9% over the course of the next decade. Tomorrow's skilled workers will have to leverage technologies like artificial intelligence, geographic information and immersive reality to ensure a functional supply chain.

For the current and emerging workforce, this creates two challenges:

Many young people entering the workforce hear the phrase supply chain and envision hard, physical labor or vehicular roles. Certainly, those roles exist, but now more than ever we have an exciting slate of jobs that defy such expectations. This is, of course, a messaging and recruitment challenge. For new, skilled hires, the ideal career approach may be to start off in operations before transitioning into technological or tactical roles.
There is a need for reskilling. No one wants to be replaced by a new machine or technology, and companies shouldn’t have to lose valued employees in the name of technological progress either. Forward-thinking companies are choosing to upskill and reskill existing employees, rather than depend on layoffs and new hires. Amazon recently announced that it will spend more than $700 million to train 100,000 employees for higher-skilled jobs. It’s a six-year undertaking in which the company plans to reskill workers through its Amazon Technical Academy, Machine Learning University, Amazon Web Services Training and Certification program, and other programs.

Whether you’re looking to reskill current, dedicated employees or the local talent pipeline, it all comes down to bridging the gap through effective training, education, support and placement. The tools already exist; it’s just a matter of making sure they’re properly leveraged throughout the supply chain field and within major supply chain–intensive companies.

The supply chain is vital. People need delivered goods, and the supply chain employs a huge number of workers who make that happen. Although employment opportunities in this field will increase in line with the national average, the jobs themselves will change to include a variety of high-tech roles to meet the needs of a technologically evolving field. Digitalization and disruptive technologies, which affect all industries across the board, will only continue to force us to embrace change. Reskilling and upskilling programs are more than a mere generational necessity. They’re an essential step to ensure adaptability and sustainability.

Weatherproof Your Supply Chain

Tue, 10 Mar 2020 00:00:00 -0500

What are some of the worst risk scenarios for your supply chain? A brand-damaging product recall? A cybersecurity breach? Major equipment failure? Most risk scenarios can be avoided or at least mitigated. But then you have the weather. Try as we might, we cannot control it. Today’s forecasting technology produces relatively accurate estimates of weather conditions, storm paths and precipitation amounts, but it cannot yet track weather disasters down to the minutest levels in order to help companies determine if they need to initiate their emergency preparedness plans.

Regardless of predictions, the effects of weather disasters — tropical storms and hurricanes, earthquakes, tornados, flooding and severe storms, blizzards and extreme cold, and prolonged droughts — can range from minor inconveniences to major disruptions. Facilities lose power, roadway blockages prevent distribution activities, and major damage causes months-long shutdowns.

According to the National Centers for Environmental Information, tropical cyclones and hurricanes cause a majority of damage and deaths in the United States. This is because they generally cover a wide geographical area. Severe storms, primarily tornados, are the most frequent major natural disaster, but cause less damage and fewer deaths because they tend to cover smaller areas. Droughts and winter storms seem to cause a disproportionate number of deaths, possibly because they span a longer period of time. In addition, droughts often are accompanied by heat waves, and winter storms often bring subfreezing temperatures.

These statistics capture the overall cost of major weather disasters. However, few studies review the specific costs for affected supply chains. And they can be substantial because so many areas of supply chains are affected. Here are just a few examples:

Loss of power typically is one of the first and most common effects of a storm. Even during relatively minor storms, it’s not uncommon for a tree to fall on power lines. Although short power losses are minor inconveniences in the grand scheme of things, ongoing outages can bring operations to a standstill, if emergency generators are not in use. Small businesses in particular may never recover from the loss of business continuity.
Transportation will certainly at least slow during storms. After, damaged bridges, flooded or snow- and ice-covered roads, freezing temperatures at airports, and more can stall the movement of goods for prolonged periods. In turn, perishable items may need to be discarded if they are not brought to market in time.
In cases of facility damage, production equipment, raw materials and finished goods could all be affected. As a result, companies may miss order deadlines and sales opportunities and incur repair costs. In the agricultural industry, blizzards, snow, frost, floods, high winds, storms and drought can completely destroy a year’s crop or sicken or kill herds of livestock. This essentially wipes out the farmer’s profit opportunities for the year and can create material or food shortages for customers and consumers.
Employees are affected too. If roads are blocked, they can’t commute to or from work. Some workers may have damage to their own homes and need time to recover. In cases of lengthy shutdowns, employees may be stuck without pay.

Risk management lessons

The silver lining is that natural disasters present valuable learning opportunities to make supply chains more robust and prepared for a variety of risks. For example, in March 2011, an 8.9-magnitude earthquake struck the northeast coast of Japan. This was followed by a tsunami that destroyed thousands of homes and tons of infrastructure, such as roads and dams. The death toll exceeded 86,000, and 550,000 people had to evacuate the region. A subsequent nuclear meltdown in Fukushima compounded all of this damage.

This disaster resulted in costs of $210 billion for Japan and its supply networks. Because of parts shortages from the affected area, Toyota, General Motors and Nissan had to temporarily shut down final assembly in both the United States and Japan (Carey 2018). Japan also is a source of a number of electronic components, such as copper foils for printed circuit boards, silicon wafers to make chips and resin to package them. As production ground to a halt, customers scrambled to find alternatives or limit their output.

A comprehensive study of four affected companies highlighted a greater need for supply chain design information and portability of those designs (Park, Hong and Roh 2013).

Mitigation tips

Experts who have studied trends in natural disaster effects on supply chains, including Grabel (2018); Park, Hong and Roh (2013); Kochar (2018); Parker (2019); and Duckworth (2019), offer these risk mitigation tips: First, develop total supply chain visibility. It is only logical that supply chain managers must know who their suppliers are in order to evaluate the risks from natural disasters. Most companies know their tier-one suppliers, but fewer know the businesses at tiers 2 and 3. Duckworth (2019) recommends using supply chain control towers to extend supply chain visibility through advanced analytics, real-time collaboration and sophisticated optimization. However, he cautions that many control towers do not reach their full potential because they are built on antiquated foundations.

Next, develop plans for preparation, mediation, recovery and redesign. It always is desirable to have action plans ready for emergency situations. A good plan can usually pay for the cost of developing it.

Incorporate weather forecasts into risk management plans. A recent report from the Met Office found that half of U.K. companies cite weather as one of the top three factors external to their businesses that drive consumer demand, but one-third of these companies do not use meteorological data in their supply chains (Buntrock 2019). Catastrophic events, occurrences of severe weather and year-over-year changes in weather pose various degrees of risk for companies and their supply chains. These risks range from severe, prolonged supply chain disruptions, to critical stockouts, to escalating costs due to last-minute implementation of the emergency procedures. When these risks come to fruition, the financial impacts can easily reach millions of dollars or more. As a result, preparedness should include the ability to sense, capture and analyze weather data and turn it into actionable insights.

Identify critical components or finished items. Then, determine critical suppliers and the level of risk for these partners. A number of agencies have developed maps to show disaster-prone areas.

Next, select and train a disaster response team. Its members should be knowledgeable and versatile because they will have to deal with unique situations. No matter how many hurricanes they have already encountered, the next one will be at least slightly different.

Develop an early-warning communication system and check on your own facilities as well as your supply chain partners. A global study of chief information officers by Gartner found that nearly 80% of corporations are not checking their supply sites for exposure to natural catastrophe risks, leaving them vulnerable to disruptions (Burnson 2017). Finally, build redundancy into your supply chain. Most companies work to develop tightly coupled supply chains that can deliver products faster and change quickly as customers look for new and improved versions. However, the more tightly coupled a supply chain is, the more susceptible it is to disruptions. C.H. Robinson (2016) points out that disasters used to be felt chiefly by companies in an affected region. Now, with global supply chains, an issue in one area can have far-reaching impacts.

Weather trends are showing that natural disasters will likely worsen as climate change takes it course. Be ready and resilient to keep your global supply chain moving in the wind, rain and sun.

References:

1. Buntrock, C. 2019. “Weather: The greatest risk?” Logistics and Transport Focus 21, no. 2: 36.

2. Burnson, P. 2017. “No shortcuts to security.” Supply Chain Management Review 21, no. 6: 42-45.

3. Carey, Helen. 2018. “The Impact of Natural Disasters on Economy and Supply Chain — and How to Prepare for the Worst.” Thomas Insights, September 26. https://www.thomasnet.com/insights/how-natural-disasters-affect-the-supply-chain-and-how-to-prepare-for-the-worst/.

4. H. Robinson. 2016. “Add Resilience to Supply Chains.” Supply Chain 24/7. https://www.supplychain247.com/paper/add_resilence_to_supply_chains/c.h.robinson.

5. Duckworth, Nigel. 2019. “What Every Executive Needs to Know about Control Towers in Supply Chain Management.” One Network Enterprises. http://www.onenetwork.com.

6. Grabel, Lowell. 2018. “Is Your Supply Chain Ready for the Next Disaster?” APICS magazine, April. http://www.apics.org/apics-for-individuals/apics-magazine-home/magazine-detail-page/2018/04/21/prepare-supply-chain-natural-disaster.

7. Kochar, A. 2018. “Is your supply chain prepared for disaster?” Supply Chain Management Review 22, no. 6: 48-49.

8. NOAA National Centers for Environmental Information. 2019. “Billion-Dollar Weather and Climate Disasters: Table of Events.” National Oceanic and Atmospheric Administration. Accessed July 18, 2019. https://www.ncdc.noaa.gov/billions/events.

9. Park Y., P. Hong and J.J. Roh. 2013. “Supply chain lessons from the catastrophic natural disaster in Japan.” Business Horizons 56, no. 1: 75.

10. Parker, G. 2019. “How the supply chain can thrive in the face of natural disasters.” Material Handling & Logistics.

For an annotated list of more than 70 articles about this topic, contact the author at crandllre@appstate.edu.

Exciting Tech Revitalizes the Value of Plastics

Fri, 06 Mar 2020 00:00:00 -0600

“For decades, product design, production, sale and use have followed the take, make and dispose industrial model,” writes SCM Now magazine “Relevant Research” author Richard E. Crandall, PhD, CFPIM, CIRM, CSCP. “The manufacturing company takes natural and synthetic resources; converts them to a product; and then sells the item to a consumer, who ultimately uses and then disposes of it. In this model, products are designed to be sold at a low price, are not intended to have long lives and are difficult to service.”

This traditionally linear economy too often creates substantial amounts of waste and exhausts natural resources. However, the concept of a circular economy — one in which all of the by-products of process A become the raw materials for process B — is emerging as one of the most promising trends in supply chain.

A circular economy fully exploits resources and “squeezes out every bit of value,” writes Supply Chain Strategist Deborah Dull in the ASCM blog. Such business models are on track to add $4.5 trillion to the global economy by 2030.

One organization actively pursuing this opportunity is BASF, which is using blockchain to improve the traceability of recycled plastics. Its pilot program is a response to what company leaders call “one of the most pressing environmental challenges — plastic waste.”

Furthermore, BASF believes the scalable blockchain solution will support the track and trace and monetization of plastics within its supply chain. “Much of the collection and sorting activities are challenged by manual processes and material contamination,” BASF Canada President Marcelo Lu said in a media release. “Additionally, traceability is a concern as new commitments start to emerge from brand owners and retailers.”

A successful implementation will result in “a collaborative digital consortium,” uniting plastic manufacturers, suppliers, government entities, retailers, waste collectors and recyclers in the mission to keep the lives of plastic molecules circular, explained Anthony DiPrinzio, who leads the BASF Blockchain Lab, in the release.

Last week, Gartner released a survey, which found that 70% of supply chain leaders are planning to invest in the circular economy in the next 18 months. The research shows that blockchain is just one tool supporting circular economy goals. Gartner says organizations are also tapping into the capabilities of advanced analytics, 3D printing, the internet of things and machine learning.

Sarah Watt, Gartner senior director, notes that businesses are embracing this trend because the circular economy creates an ecosystem of materials: “What was previously viewed as waste now has value.”

Full circle

BASF is using innovative methods to realize this value. Interestingly, the company has been recognized before for its efforts to blaze trails and find solutions to pressing problems. The organization is a past winner of the ASCM Awards of Excellence — the premier supply chain awards program for corporations and individuals.

The Call for Entries is now open, giving you the chance to be the next to join this distinguished list of honorees. The corporate award categories are:

Corporate Transformation
Learning and Development
Making an Impact.

The individual award categories are:

Emerging Supply Chain Leader
Supply Chain Leader
Diversity and Inclusion Champion

Learn more and enter today at ascm.org/awardsofexcellence. Good luck!

Digital Transformation in Supply Chain Planning: Barrier or Enabler?

Thu, 05 Mar 2020 00:00:00 -0600

Has your company initiated a digital transformation initiative? Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to improve business performance. When the latest technology is implemented correctly, it has the potential to optimize processes, reduce costs and boost earnings. In fact, McKinsey & Co. estimates that companies that aggressively digitize their supply chains can boost their annual earnings before interest and taxes by 3.2% and their annual revenue by 2.3%.

However, if your company has not yet embarked on its digitization journey, you certainly are not alone. A 2019 digital transformation study by ToolsGroup and Spinnaker found that only 7% of participants are reaping the benefits of digital transformation of supply chain planning. More than half of respondents still are exploring and evaluating their options, another 8% are working on gaining broad organizational support, and about a third are in the process of implementing and deploying the technology.

At the same time, about 90% of the nearly 200 surveyed supply chain professionals noted that volatile demand and unpredictable customers are at least a moderate supply chain planning challenge. This requires faster, more agile supply chains enabled by digitization.

So, what’s holding everyone back?

Fear of change was the number-one barrier mentioned by respondents. Change management is difficult to begin with, and some executives may resist investing in technologies that do not have a proven track record of success. In addition, employees may resist the influx of technologies, worrying that their jobs will significantly change or be eliminated. McKinsey & Co. advises that these fears can be assuaged by explaining to stakeholders what the digital transformation actually means and highlighting its benefits, such as an improved customer experience, greater service levels and higher productivity.

Along with fear of change comes some of the practical aspects of change, such as whether workers have the skills to work with the new technology. Planners and other supply chain practitioners in the new digital world need skills in communication, decision making and change management on top of the standard technical skills. In line with this, about one-third of companies reported that they are investing in staff training to help fill knowledge gaps and further increase the success of digital transformations.

About 25% also say they are risk averse and therefore have not pursued digital transformation with gusto. This is logical, because many types of technology are still new, and use cases are yet to be substantially proven. Furthermore, with so many different technology options — even for a specific type of technology — on the market, it is difficult to know which types of technology and brands deserve investment.

The bigger picture

In reviewing the results of the “Digital Transformation in Supply Chain Planning: On Pace or at Risk?” study, two big points stand out to me. First, digital transformation is not a singular activity. It is a set of interrelated activities that span across people, processes, technology, policies and metrics. Organizations are actively working to strike a balance across all those dimensions. They need innovative planning technologies that support operational business goals, skilled personnel to apply the technology profitably and change management to effectively embed these capabilities into corporate culture.

Second, although progress might seem slow, the fact that 27% of respondents are in the executing phase shows that efforts to realize the benefits of digital transformation actually are moving forward at a fast and furious pace as companies identify use cases, build roadmaps, and select and deploy technology. Indeed, 21% of respondents are working on projects related to the internet of things; 18% robotics; 16% artificial intelligence; 14% machine learning; and 12% augmented and virtual reality, blockchain and drones.

But, as with any other technology project, there is not a one-size-fits-all approach to digital transformation. Company leaders need to seriously consider the business cases of the various technologies and evaluate how different technologies can benefit their organization’s goals. From there, they need to set a roadmap that plans out the steps in their digital transformation, which is not just a one-and-done activity but rather a set of projects that add up to a huge competitive advantage.

In addition, organizations should consider what is holding them back from digital transformation. How can these roadblocks be overcome? And what do you stand to gain?

Unavoidable Disruption — and Why It’s a Good Thing

Fri, 28 Feb 2020 00:00:00 -0600

Disruptive innovation, a phrase coined in 1995 by Harvard Business School Professor Clayton Christensen, describes a product or service that initially takes hold at the bottom of a marketplace, but relentlessly expands until it eventually displaces established competitors. Some well-known examples include personal computers supplanting mainframes, mobile phones replacing hard-wired lines, and subscription streaming services overtaking video rental stores.

Additionally, a disruptive innovation often gives “a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill,” Christensen says.

Disruptive innovation is happening right now in the American whiskey industry, thanks to a new wave of rapid-aging by craft distilleries. “Imagine that you run a business where, above all else, your customers value how long it takes to make your product. That, hands down, is your competitive advantage,” Chuck Swoboda writes for Forbes. “But then you discover that time no longer matters. A gang of new start-up companies comes along — and they’re making a similar product in a fraction of the time. It’s a classic industry disruption.”

Swoboda says established distillers such as Johnnie Walker, Knob Creek and Woodford Reserve age their whiskey in oak barrels or casks, often for decades. Conventional wisdom has been the longer it matures, the better it gets. But traditional companies are suddenly at risk of losing their edge. Innovations such as UV light that quickly breaks down alcohol molecules, intense heat that accelerates the chemical reaction process, and smaller barrels to increase surface area contact are enabling craft distillers to produce fine whiskeys in days, not years.

Currently, there are more than 1,500 of these companies in the United States — accounting for about 5% of sales nationwide — but with the ongoing popularity of the craft movement, that number is certain to grow. And these businesses are making excellent products: Some rapid-aged craft distillers have won gold medals; others are receiving honors such as being named Whiskey Innovator of the Year.

Changing the world

The APICS Product Life Cycle Operations Reference Model (PLCOR), a reference for innovation, product and portfolio management, includes strategies for coping with disruptive innovation. Best practices include supply chain risk management, bowtie risk management (an evaluation method used to analyze and demonstrate causal relationships in high-risk scenarios), product and portfolio risk management strategy implementation and analysis, maintaining a product and portfolio risk register, monitoring product and portfolio risk, and product and portfolio risk assessment.

In addition, the ASCM Enterprise Certification is a trailblazing corporate supply chain program and the first and only designation measuring social responsibility, economic sustainability and ecological stewardship. ASCM Enterprise Certification empowers organizations to reach goals, improve results and be more competitive in today’s global business world. This unique program can help your organization

gain a competitive advantage by showcasing economic, ecological and ethical supply chain practices
demonstrate transparency to prospective customers and consumers
ensure suppliers align with your organization’s values
manage accountability to support your organization’s ethical standards
embrace a culture of social responsibility.

Get started today by completing the free, 30-minute Enterprise Supply Chain Maturity Assessment. ASCM will then aggregate data from participant responses to generate a benchmarking report with cross-industry information. Take this essential first step — the knowledge you gain will set you on your way toward creating a better world through supply chain.

Make the Best of Ongoing E-Commerce Challenges

Wed, 26 Feb 2020 00:00:00 -0600

Numbers are a proxy for reality. E-commerce has been growing rapidly and even accelerating in the last 10 years. Forecasts by eMarketer estimate that online sales will reach more than $4 trillion in 2020. This rapid growth in e-commerce is spurring dynamic changes that greatly influence the logistics and transportation management that support the retail industry. Here are five key areas being affected by the rapid e-commerce growth.

1: Delivery speed. Consumers have become increasingly impatient throughout the last few years. When they previously would have waited a few days for product delivery, they now expect next-day, same-day or one-hour delivery. Most are even willing to pay extra for the quick delivery. However, if an item will take too long to arrive, the consumer may choose to buy something else or select a different retailer.

All of this puts pressure on the retailer to ensure that each product leaves the warehouse on time and that the transportation method used — whether plane, train, truck or other vehicle — is fast and efficient enough to ensure timely delivery.

2: Customized delivery expectations. But efficient deliveries are not consumers’ only expectation. Shoppers of today also want to customize their deliveries, including when, where and how they receive their orders. Perhaps a consumer wants a package hidden in his or her yard on a specific day of the week. As a result, it has become necessary to process smaller shipments, which translates to an increase in transportation costs. Although some consumers are willing to pay extra for these custom delivery services, retailers still are looking for ways to make this whole process more efficient and cost effective.

3: The returns challenge. With online purchases, consumers cannot touch, feel or try on their items before they buy them. As a result, they are more likely to return items that do not meet their expectations. When this happens, the cost of the return as well as the effort of planning the return usually fall on the retailers’ shoulders. The process also usually involves a third-party courier service to pick up the items from the consumers and return them to the appropriate facilities.

Once the items are received, retailers need to figure out what to do with them. Depending on the issue, the items could be resold as new or at a discount. Some items will need to be refurbished or repackaged in order to make this possible. In addition, the retailer must ensure that a replacement item, if requested, is sent to the consumer in a timely manner.

To handle the growing number of e-commerce returns, some companies have had to hire whole departments to ensure returns are handled efficiently and effectively. At the same time, retailers also are looking for solutions that can better facilitate this process. Undoubtedly, artificial intelligence solutions will turn up soon to handle this logistics challenge.

4: Storage shifts. Warehouses used to be the main holding points for items that were waiting to be shipped to consumers or ones that were received as returns. However, with demands for more frequent, quicker deliveries, brick-and-mortar stores are becoming the new warehouses, as they often are closer to the consumers placing the orders. Store personnel can pull items from store inventory and then pass them to their own delivery team or third-party couriers, such as UPS, FedEx, DHL and Royal Mail, for home delivery. Companies that do not have brick-and-mortar stores may opt for smaller, local warehouses to fulfill deliveries in certain areas. Because the delivery distance is shorter, items can be shipped more quickly and cost effectively.

Of course, more storage locations equates to more logistics challenges. Route optimization becomes critical for ensuring that items are moved from place to place efficiently, and effective item and vehicle tracking is necessary to make sure orders are delivered on time and in full.

5: Increased tracking technology requirements. In order to keep up with the ever-increasing expectations of e-commerce consumers, companies must ensure they invest in effective tracking technology. Improved inventory management, warehouse management and transportation management programs help retailers ensure that they have the ordered items in stock and transfer them to the proper locations via the most efficient methods, given the timing expectations. Disruptions occur when companies are unsure where a certain item is being stored or when inventory is miscounted and needs to be reordered from the supplier or manufacturer. Similarly, in the case of brick-and-mortar stores acting as warehouses, if an in-store item is not placed in the proper shelf location, it will take more time for the store employee to find it and ship it to the consumer.

Overall, the e-commerce industry needs better logistics and transportation management support to better serve consumers. The constant and rapid growth in the market is bound to keep influencing and driving changes in the logistics and transportation aspects that help keep the industry afloat. With the projections for growth, one can only imagine that more changes will be coming soon.

Engaging Future Talent

Fri, 21 Feb 2020 00:00:00 -0600

More and more organizations today are discovering nontraditional ways to fill the growing talent gap. Some are founding entirely new technical schools. Others are hiring ex-convicts. And companies including IBM are tapping into people who lack advanced degrees.

An article in the Raleigh, North Carolina-based News & Observer describes a 12-month-long apprenticeship program that was launched by the IBM office in the state’s Research Triangle Park (RTP) innovation hub. The initiative enables people with only high school diplomas to gain valuable skills in coding, cybersecurity and more.

The piece tells the story of Tony Byrd, a 27-year-old father of two, who had been working at the coffee shop in the IBM facility’s main lobby since graduating high school about 10 years ago. Byrd recently completed his apprenticeship, which enabled him to get paid while gaining 200 hours of education.

“Now you can find him buying coffee from the same bar he used to run,” the article says, “except this time as a full-time IBM employee.”

The program began at IBM’s RTP office in 2017. Since then, about 200 trainees have graduated, 90% of them joining the IBM staff. As an added benefit, IBM Director of Career and Skills Kelli Jordan says the training has increased the company’s workforce diversity. “We do see candidates who may have not been able to go to a traditional college but have been able to build skills,” she says.

Jordan also told the News & Observer that the concept was “born of necessity” because of the worsening skills shortage. A new Korn Ferry study, which includes a country-by-country analysis, supports this reasoning. The report says there simply aren’t enough people to fill open jobs. Furthermore, by 2030, the global gap will total more than 85 million openings.

Making the case

Just as IBM knows it must recruit differently — with both classroom and real-life projects for its apprentices — ASCM is addressing the ongoing supply chain talent gap through our Case Competition, in collaboration with Deloitte Consulting. In the preceding edition of SCM Now Impact, I shared information on last week’s regional rounds, where 64 teams competed in Amsterdam, Atlanta, Chicago, Hyderabad, Mexico City, Philadelphia, San Francisco and Singapore. On behalf of all of us at ASCM and Deloitte, I want to congratulate those who will be advancing to the finals at ASCM CONNECT, September 13-15, in New Orleans:

Georgetown University
Jade University, Germany
J. Somaiya Institute of Management Studies, India
Rutgers University
Singapore University of Technology and Design
University of Houston
University of San Diego
University of Wisconsin - Eau Claire

Ken Olsen, managing director and global supply chain planning leader at Deloitte Consulting, puts it well, calling the Case Competition “an invaluable opportunity to challenge students to address complex, evolving supply chain scenarios that will serve them in their future careers.”

This year, we saw incredible growth and diversity in participation, with 309 teams representing 137 schools from 24 countries. A total of 1,236 undergraduate and graduate students are competing, collaborating and learning about supply chain — while getting inspired and engaged to be an integral part of tomorrow’s networks. I hope you will come to New Orleans to join us in cheering them on.

Prepare Your Supply Chain Organization for Blockchain

Thu, 20 Feb 2020 00:00:00 -0600

Blockchain is garnering a tremendous amount of hype as a potentially world-changing technology in the realm of manufacturing and supply chain. Advocates tout benefits such as increased efficiency, reduced transaction costs, and more control and transparency across all supply chain activities. The technology may well transform manufacturing and supply chain operations, but, before this vision can be realized, learn how to overcome the typical hurdles.

Of course, there are technology maturity, resource requirement and scalability challenges. Three basic elements are essential to making a blockchain a cryptographically secure, trusted network: public key cryptography, a distributed or peer-to-peer network with a shared ledger, and a governing program that contains the controlling blockchain protocol.

In addition, because blockchain technology still is relatively new, there is a general lack of accepted standards and governance models, regulatory oversight, and understanding of when it is a better solution than existing technologies. Effectively addressing these issues will drive the adoption of blockchain solutions.

Commonly accepted blockchain or distributed ledger standards do not exist and are only now being discussed by industry groups. Though more technically related standards like enterprise security and interoperability are needed, the business and regulatory issues such as legal, tax and regulatory compliant accounting standards are equally as important.

For example, a blockchain would likely consist of nodes that are geographically dispersed, each potentially under different legal and tax jurisdictions. How does the blockchain remain compliant with a variety of legal and regulatory schemes for these geographically disparate nodes? Clearly a standard defining the law and jurisdictional compliance would need to be in place to ensure a company has certainty around the laws to be applied in case of disputes.

Appropriate use cases

Satoshi Nakamoto, the person or persons credited with developing Bitcoin, originally discussed blockchain in the context of a very specific use case, that of a peer-to-peer version of electronic cash. Although the original idea was to distribute records and processes without a middleman, there still isn’t a clear understanding of the best-fit use cases for this technology, particularly in manufacturing and supply chain operations.

For example, supply chain traceability often is cited as a potential use case because all supply chain partners would be required to post their transactions to the blockchain, thereby ensuring a secure, highly visible chain of custody. But what happens if a member of the supply chain posts fraudulent activity, such as by labeling a counterfeit product as authentic in the blockchain? How would other members of the supply chain vouch for the validity of the transaction if they weren’t physically there? Clearly, internal processes are needed to ensure that posted transactions, such as a quality inspection, occurred. Does that require a blockchain within a blockchain to validate that inspection? A better question to ask is whether or not this actually is a good use case for blockchain technology.

Use cases may also depend on whether the shared network is public or private. It seems that the best are those that prioritize the characteristics of robustness, chain of custody, decentralization and proof of source instead of speed and scalability. Private or small consortiums may exist that don’t demand full trust among participants. These users may be willing to sacrifice trust for speed, privacy or auditability.

How about cryptographic security? Some blockchains may not require a majority of nodes to complete the complex mathematical algorithm, also known as proof of work in Bitcoin terms, to participate. If this function is not required by a blockchain, is the platform really a blockchain, or is it another type of shared ledger?

Blockchains also face technical questions with respect to resource requirements and scalability. The cryptographic security in a blockchain is met by using a mathematical algorithm that no party controls and is distributed throughout the blockchain. When the algorithm is solved by a majority of the participants, consensus is achieved, and another secure block is added to the blockchain. However, solving these complex algorithms requires large amounts of computing power. For example, the power used in one bitcoin transaction is roughly five times greater than what Visa uses to process 100,000 transactions. This level of computer usage represents a significant energy and environmental cost that cannot be ignored.

Scalability is another significant challenge, as blockchain transactions are very slow to process, especially when you compare them to almost any typical electronic business transaction. For example, a bitcoin transaction can take anywhere from 60 minutes to several hours to process. Because of the distributed nature of blockchains, the time for processing a transaction will only lengthen as more computers are added, resulting in much slower and more cumbersome blockchain transactions. This trait doesn’t fit well with the idea of an agile supply chain.

The application of blockchain technology in supply chain is still in its early stages. The good news is that the technical challenges cited here likely will be solved by advances in engineering and science. The key issue, therefore, will be dealing with the business-process challenges. Once both are addressed, blockchain technology will flourish across the global economy.

Supply Chain Metamorphosis

Tue, 18 Feb 2020 00:00:00 -0600

Life as a supply chain manager has drastically changed over the years. Today’s young professionals would laugh hysterically if they were asked to work the way we did back in the 1980s. In fact, all of us would.

Back then, I was a buyer/planner. I remember walking into the office on Monday mornings and being given a massive green-and-white, pin-fed computer printout. It was roughly 18 inches wide and two inches thick, containing our weekly material requirements planning (MRP) run for all parts within our respective portfolios.

We went through the report meticulously, manually calculating what to order before completing the forms that detailed the production orders. We then submitted them to the master scheduler and, on Friday afternoon, received approval. We spent the last few hours of the day frantically entering orders into the system for the weekend run. This arduous process was just for our internal manufacturing team. Purchasing something from a supplier was an even more ghastly routine. I’m not sure those were the good old days.

In 2018, I attended ASCM’s annual conference in Chicago. One workshop has left a lasting impression on me. My fellow attendees and I discussed change in supply chain. We talked about the importance of challenging old norms, and we wondered, “What is our role as supply chain professionals?”

The main discovery we made was the magnitude of our industry’s role in global business initiatives. Sure, supply chain is inherently concerned with moving products quickly and efficiently. But those of us in this industry also improve the world by getting essential goods to people in remote places. This lesson helped me recognize the significance and complexity of global supply chains — and the need to embrace change.

Change is not an option within a company; it is a must. Industries evolve over time to reflect improved technology and a global economy. Without change, both organizations and individuals risk becoming irrelevant.

I admit that I don’t really like change. I prefer to stay within my comfort zone. However, that workshop has helped me think more granularly about my specific role as a global planner. Yes, it has changed very quickly in recent years. I spend much less time manually placing production and purchase orders, evaluating reorder points, reviewing economic order quantities, and expediting. Instead, I work on complex global improvement projects, stakeholder management, strategy alignment, and customer and supplier relationships. I am constantly looking for ways to improve business processes, and I always keep customers as my primary focus.

While change can be uncomfortable, more often than not, it leads to increased productivity and overall business and personal advancement. Without change, we would still be stuck in the archaic world of massive pin-fed computer printouts. My job today is a lot more fun and fulfilling than it was decades ago. I’m certain countless supply chain veterans would agree.

Have you learned a lesson at work that you would like to share with SCM Now readers? Submit an article of approximately 750 words that teaches, enlightens or amuses to editorial@ascm.org.

Do You Have the Right Mindset?

Fri, 14 Feb 2020 00:00:00 -0600

Each year, companies across the globe spend a whopping $356 billion on employee training, education and leadership-development initiatives. Unfortunately, few of these businesses see a meaningful return on that investment. According to a recent study, this is because organizations neglect a quality that is essential to how people learn, make decisions and conduct themselves — their mindsets.

A Harvard Business Review article explains that mindsets drive what we do and why. They explain why two different people might encounter the same situation, yet process and respond to it very differently. Authors Ryan Gottfredson and Chris Reina write, “When leadership development efforts ignore mindsets, they ignore how leaders see and interpret problems and opportunities.”

Gottfredson and Reina recently investigated research across the social sciences in order to better understand the various mindsets that we possess. They describe them as follows:

Growth versus fixed: Those with a growth mindset believe that people, including themselves, can change their talents, abilities and intelligence. Having a fixed mindset means you think that kind of change is impossible. A growth mindset makes you more mentally primed to approach and take on challenges, give and take feedback, adopt effective problem-solving strategies, and be persistent when working toward goals.

Learning versus performance: People who possess a learning mindset are motivated toward increasing their competence and mastering something new, whereas a performance mindset involves being motivated to gain favorable judgements (or avoid negative judgements) about one’s competence. Those with learning mindsets engage in deep-level learning strategies; tend to perform at a higher level; and are persistent, adaptable and cooperative.

Deliberative versus implemental: If you have a deliberative mindset, you are more receptive to information as a way to ensure that you think and act optimally. Conversely, an implemental mindset means you are more focused on acting on decisions, which may close you off to new and different ideas. People with deliberative mindsets tend to make better choices because they are impartial and accurate in their processing and decision-making.

Promotion versus prevention: A promotion mindset describes an emphasis on winning and gains, while a prevention mindset is depicted by a focused on avoiding loss or preventing problems. The authors note that those with a promotion mindset demonstrate higher levels of task performance and innovative behaviors and are more prone to positive thinking, open to change and likely to persist in the face of a setback.

Mentoring tomorrow’s supply chain leaders

Gottfredson and Reina stress that it is essential for organizations to prioritize development by targeting the four attitudes that enhance our ability to engage with others, navigate change and perform our roles effectively — growth, learning, deliberative and promotion mindsets. The ASCM Case Competition, provided in collaboration with Deloitte Consulting, is a unique opportunity for undergraduate and graduate students to hone these essential skills while testing and enhancing their supply chain knowledge.

The program reaches students at universities across North America, as well as in Africa, Asia, Europe and South America. This week, Case Competition teams are at the regional rounds, working on an end-to-end supply chain challenge drawn from real-world experiences. The advancing teams then will compete for top prizes at ASCM CONNECT, September 13-15, in New Orleans.

I invite you to help ASCM educate, inspire and engage tomorrow’s supply chain professionals by becoming a mentor or advisor. As we continue to face a skills shortage, the Case Competition is an invaluable opportunity to prime the talent pipeline and ensure the next generation of leaders possess a mindset for success.

Use Artificial Intelligence to Improve Reverse Logistics

Thu, 13 Feb 2020 00:00:00 -0600

Many executives have administrative assistants who schedule their meetings, manage their calendars and keep them on task. This frees up the executive to focus on building relationships, come up with big picture ideas and run the company. What if you could hire an administrative assistant to manage your company’s reverse-logistics operations? And what if that assistant was a robot?

Brick-and-mortar retailers are struggling to keep up with online stores because there’s so much overhead associated with a physical store, including employees. Many processes are manual, and technology isn’t integrated as deeply as it should be. This means there are numerous opportunities for brick-and-mortar stores to reduce employee efforts and save money by streamlining and automating processes using artificial intelligence (AI) and predictive analytics.

Predictive analytics is the use of data, statistical algorithms and machine-learning techniques to identify the likelihood of future outcomes based on historical data. Essentially, computers can monitor efforts and processes over time to find patterns and trends and then use those patterns to predict what will happen in the future.

Business owners can then look at those predictions and take action to alter the outcome. For instance, some organizations use predictive analytics to determine whether or not a customer will renew a yearly subscription based on his or her past behavior. If a customer is flagged as someone who won’t likely renew the subscription, sales and marketing teams can double down on efforts to change the customer’s mind before a decision is made.

Many businesses rely on AI and predictive analytics to improve their service, streamline operations and predict customer churn so it can be stopped before it occurs. Stores are capturing and analyzing images of customers to determine the effectiveness of in-store advertisements. Grocers are using machine learning to analyze photos of perishable products to check product freshness and alert employees of products that need to be removed from the floor. Retailers use predictive analytics to determine the likelihood of repeat purchases based on past purchasing behavior.

Although predictive analytics is most often used to predict customer behavior, there are many opportunities to use predictive analytics to improve internal processes, including reverse-logistics operations.

Currently, most companies aren’t spending much time or many resources on their logistics operations. Carriers are called on an as-needed basis when someone from a third-party janitorial crew notes that a container, trailer or dock floor is full. The system is extremely reactive and often unreliable. Store owners don’t always receive confirmation that the pickup was scheduled, nor do they know when a carrier is coming to retrieve the overflowing trailer.

This is even more problematic because many nations are experiencing a transportation crisis. When there is a shortage of qualified workers and equipment, this causes delays in services increased transportation costs. Businesses face accessorial fees if carriers are left to wait at the loading dock, if last-minute pickups are scheduled or if a shipment isn’t ready at the scheduled time.

For this reason, it is essential to optimize dock time and scheduling in all areas of supply chain management. Machine learning and predictive analytics can be especially helpful here. At this point in time, some retailers have installed devices on their containers and trailers that capture pictures of the store’s waste and recycling materials. My company, Sustayn, has developed smarter recycling and waste management systems that incorporate machine learning to analyze the images and learn to distinguish between the various types, improving sorting efforts.

When combined with predictive analytics, these smart waste management systems have the potential to allow businesses to predict when a load will be ready and notify the carrier ahead of time, so a full trailer isn’t left sitting for any longer than necessary. It also guarantees that the load will be ready to go when the carrier arrives to pick it up. This model removes the need for a third-party janitorial crew to be involved. More predictable pickups can be scheduled weeks — not just days — in advance, eliminating the chances of overflow and last-minute requests. Rather than relying on a stressful, reactive process, business owners can take control and create reliable and consistent systems.

Not only would this process limit accessorial fees, but it decreases human efforts, thus cutting costs and reducing errors. The automated notifications also free up employee time by moving low-value work from a person to a machine. Shipments are only scheduled when needed, and the process becomes highly automated.

Companies that have incorporated predictive analytics into their reverse-logistics operations have seen an improvement in service levels with fewer phone calls and reported issues. They’ve also realized freight savings between 5% and 10% by reducing last-minute load requests.

Of course, this is just the tip of the iceberg. There are endless opportunities for predictive analytics and machine learning to be used in reverse-logistics settings. It has the power to streamline and improve transportation planning and help alleviate some of the stress caused by the limited resources of the transportation crisis.

Unlike an administrative assistant, predictive analytics may not be able to make sure your meetings don’t run late, but it can help schedule load pickups, streamline processes and keep your business moving forward, freeing you up to focus on the big picture.

Safety-Shoe Manufacturer Applies S&OP with Form and Function

Tue, 11 Feb 2020 00:00:00 -0600

Small and medium enterprises (SMEs) have an impressive ability to innovate, create and mobilize resources in response to unexpected scenarios. Sometimes, however, it’s difficult to realize the value of change until you’re already in the middle of it. That was the case for Base Protection, a designer and manufacturer of workplace safety shoes headquartered in Barletta, Italy.

Base Protection was launched in 2003 when company founders began developing safety footwear with a brand-new concept: an anti-fatigue element to the shoe’s sole. The ultimate creation, TPU-Skin, was invented in 2005 and immediately patented. The business was acquired by Fegemu S.A. in 2007 and began expanding into European markets. By 2012, the company was selling 12 million euros of footwear annually, and it started exporting to new markets including Saudi Arabia, North America and Russia.

Base Protection is a make-to-stock (MTS) company, so manufacturing strategy and forecast accuracy are crucial. Producing too many unneeded styles will result in an excess of inventory, a lack of storage space for new products and less budget flexibility. Conversely, producing too few styles will of course lead to unhappy customers.

Today’s global marketplace has created all new requirements for businesses aiming to stay competitive, including enhanced cooperation, focus on sustainability and ethics, and long-term business sustainability. Pasquale Muciaccia, operations manager at Base Protection, explains that company leaders therefore wanted to implement a method for reducing fixed costs and obsolescence of product styles, as well as a process for managing and growing their business to stay relevant. They looked to sales and operation planning (S&OP).

The first step in their journey was making sure the rest of the organization would be on board. “At the beginning, it was not so easy to build awareness inside our organization, so we asked for an external expert capable [of introducing] the key insights of the process and the value that S&OP will bring,” Muciaccia explains. Base Protection decision-makers planned a six-month timeframe for the implementation, then created a group to run it, including a project manager, diverse team members and key users.

S&OP: What and how?

S&OP helps make feasible what is promised in a company’s business plan. It goes beyond defining a strategy to sharing it across the organization; monitoring progress; taking corrective actions; and rectifying mistakes as early as possible, rather than discovering and dealing with bad news at the end of the year.

S&OP enables senior management to verify, formally and at least monthly, the progress of the business plan through a deep integration of four functional plans: sales, production, financial and product introduction. The functional plans are managed in their subsequent level of detail (in the case of production, the master scheduling disaggregates the S&OP figures). The process acts as an essential hinge between the business and functional plans. It facilitates consistency with business objectives and acts as a tool for superior decision-making so that the main actors of a business are empowered and involved.

The relevant figures are expressed in product families to show a snapshot of the plan in its entirety. In this way, the product families are highlighted, rather than specific items, which are typically managed inside the functional plans.

However, correctly defining product families is key, and sometimes the marketing and sales product families need to be aligned with production. For each product family, sales and production plans must be prepared, with a planning horizon of 12-to-18 months. Then, the production plan can be updated monthly to ensure an acceptable level of projected available inventory, in the case of MTS companies like Base Protection. This should also be aligned with the financial requirements needed to support the corresponding inventory investment figures.

Next, key decisions are taken to the executive S&OP meeting. In case of process disagreements, the executive team takes responsibility for closing the gap. This process is an effective way to control tactical and strategic choices — such as variations in skills needed, capabilities, workloads, supply constraints, and structural changes in demand and capacity — while following an adequate time horizon. The adoption of S&OP prepares an organization to deal with unpredictable situations; reduce business risks; and focus on the pursuit of strategic goals, greater satisfaction and customer loyalty.

The main goals of S&OP include

functional plans that contribute to the strategic objectives as declared in the business plan and annual budget

a reliable sales plan
a production plan that is executable according to the availability of resources
a strategy for monitoring cash, revenues and profits as projected in the annual budget.

Best-in-class companies excel because they apply these simple, clear, consolidated rules with high commitment, discipline and persistence.

Executive board commitment

Another important aspect is ensuring the S&OP function is a management decision-making process. For this to be possible, the CEO needs to be a strong supporter. Keeping the S&OP process running monthly is vital to maintaining a balance across the business: Sales and operations in the short- and medium-long terms must anticipate and solve problems and enable structural changes.

Top management should determine the balance between demand and supply, including resource utilization, cash flow and profit figures; the company climate; and the attitude for a proactive decision-making process — and share in the effort to integrate the functional plans within the organization. If supply and demand are not in balance, the company may encounter several problems: products not shipped on time, incomplete orders, unsatisfied customers leaving to go elsewhere, insufficient or too much inventory, and so on.

At Base Protection, as at many SMEs, some of the questions asked by management during this stage include:

What will the impact on operations and resource availability be if a major customer contract is signed next month? Which of our resources will be overloaded?

When should we start talking with our major supplier if an increase in volume is expected next month?

What will the financial impact on the income statement be due to this inventory increase?

In this way, S&OP helped top management proactively outline their vision of the future so that plans for sales, operations, resources, product development, finance, and human resources are periodically assessed by leadership. Then, the vision is communicated across the organization for more detailed planning and execution, thereby further strengthening collaboration.

Another typical S&OP implementation issue is failing to get people to commit to the process from the beginning. This damages S&OP credibility. If this happens, investigate to find the root cause. Also take whatever steps are necessary to clearly highlight S&OP’s value to stakeholders. Consider hosting additional workshops, holding awareness sessions, and sharing business cases to create awareness. And be sure the facilitator, whether internal or external to the company, shows up strong and is highly effective.

Information systems

Once the process is mastered by the executive board, it needs to be deployed through a robust information system infrastructure, creating a relationship between S&OP and the enterprise resources planning (ERP) system.

Few companies have fully achieved the potential benefits of ERP. One common reason for this failure is S&OP not running well at the top. In other words, it’s not about the technology, but how S&OP managers facilitate ERP functionalities. An effective upstream S&OP process, that includes information and decision support and planning, is an input requirement for effective ERP.

Real-world results

S&OP must be a top-priority business process for today’s SMEs. It is vital to streamlining supply chain decision-making and optimizing performance, new product initiatives, and bottom-line success. CEO and executive team commitment, as well as a simple and structured information flow, are necessary for achieving the best possible results.

At Base Protection, implementing S&OP brought about numerous positive outcomes. Although, at first, the company struggled with the discipline of the process (such as scheduling and keeping regular meetings and managing time during the executive S&OP meeting), once those components were in place, the company was able to derive considerable value.

After the planned six-month launch period, the executive team at Base Protection decided to further improve forecast accuracy by lengthening the time horizon for its MTS environment from six months to one year. Muciaccia says that, once they accomplished that goal, Base Protection was able to “better manage plant capacity, anticipate demand variation more accurately and increase service levels.”

Another benefit was on the logistics side: Because of the increased accuracy in volume sales and production rates, Base Protection could cut transportation costs and decrease rush deliveries.

Today, the company’s S&OP plans are still expanding, Muciaccia says, adding that current goals include a time horizon of 18 months. To achieve this objective, Base Protection involves a cross-functional team from numerous different departments.

Muciaccia strongly recommends that all SMEs put in the time and effort to create a strong S&OP process, as this makes it possible to align the organizational behaviors and functional objectives with overall strategic goals while balancing demand with supply. As he puts it, S&OP is “a great tool for business continuity in the current turbulent environment.”

Upskilling Supply Chain Professionals for a Sustainable Future

Fri, 07 Feb 2020 00:00:00 -0600

This week, I attended the GreenBiz 20 conference, which enables sustainability-focused professionals to explore business trends and develop recommendations for better organizational accountability and reporting. Those of us who participated in the supply chain track identified a number of tactics for aligning sustainability goals with supply chain activities. Two key strategies were enhanced cross-training and ongoing professional development.

Indeed, as global supply chains contend with extreme social, economic and ecological change, investing in our people becomes ever-more crucial. As World Economic Forum (WEF) President Børge Brende writes, “Valuing human capital not only serves to equip individuals with the knowledge and skills to respond to systemic shifts, it also empowers them to take part in creating a more equal, inclusive and sustainable world.”

According to the WEF’s Future of Jobs Report, 75 million jobs in 20 major economies will be displaced by 2022. Meanwhile, as many as 133 million new roles will emerge to meet the demands of this ongoing transformation.

These points are underpinned by PwC’s 23rd Annual Global CEO Survey, which reveals the opinions of about 1,600 chief executives from 83 countries. Two central themes that surfaced from the research were upskilling and climate change.

According to the report, the key forces driving the upskilling imperative include automation, less availability of talent, reduced mobility of skilled labor and the aging workforce. “One reality is clear,” the report states, “increases in automation, changes in demographics and new regulations will make it much harder for organizations to attract and retain the skilled talent they need to keep pace with the speed of technological change. They will have to grow their own future workforce.”

Importantly, the CEOs who have embraced upskilling report benefits including stronger corporate culture and employee engagement, greater ability to attract and retain workers, heightened levels of innovation, and enhanced productivity.

“Our current approach can’t continue,” Siemens U.S. CEO Barbara Humpton told PwC. “We don’t have nearly enough qualified applicants to hire because of the technical knowledge required. So we’re going to be training a lot of non-engineers to do jobs engineers would have done in the past.”

The CEOs surveyed also recognize the risk and opportunity of climate change, noting that related initiatives can lead to significant new product and service opportunities, as well as reputational advantages and financial incentives. A recent CNN article validates these findings, reporting that asset-management superpower BlackRock is putting sustainability “at the center of its approach to investing.” The firm currently oversees $7 trillion in investments, but soon will abandon any holdings considered to be a sustainability risk.

“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” CEO Larry Fink stated in his January 2020 letter to CEOs.

The potential of our people

Today’s investments in talent set our supply chain organizations on an equal, inclusive and sustainable path to the future. At ASCM, we are here to support you in this effort, with a wide array of professional development programs, including APICS certifications and a body of knowledge that has been the global standard in supply chain learning and development for more than 60 years.

Companies around the world recognize the APICS Certified in Production and Inventory Management; Certified Supply Chain Professional; and Certified in Logistics, Transportation and Distribution designations. These credentials offer forward-looking, transformational education that will position your employees for ongoing success. Learn more about how you can cultivate and support your workforce with this essential learning and development.

5 Ways to Improve Warehouse Operations with Autonomous Mobile Robots

Thu, 06 Feb 2020 00:00:00 -0600

The market for autonomous mobile robots has proven to be quite dynamic. The barriers to entry are rather low from a product development perspective, but the barriers to success are quite high. For this reason, experts expect that the warehouse landscape will look significantly different in the near future as more companies overcome these barriers.

Today, this market is made up of robots that can autonomously navigate a warehouse; transport a variety of payloads; and be aligned with business applications, such as warehouse management and warehouse execution systems, that are responsible for orchestrating the movement of materials. And although warehouses come in different shapes and sizes and have varying purposes, all of them have some requirement of material movement, which makes autonomous mobile robots a key asset for any warehouse.

Here are five ways autonomous mobile robots can help improve warehouse operations.

Autonomous mobile robots help close labor gaps. The worldwide market for warehousing space is in a period of healthy growth as demand for goods and services worldwide increases because of global population growth and strong economies in major markets. However, the labor markets in the United States, Japan, China and many parts of Europe cannot keep up with this growth. This is one of the driving forces behind the push to automate warehouse operations. The use of autonomous mobile robots enables warehouse operations to scale on demand; redeploy human workers to more valuable tasks; and reduce the risk related to reliance on short-term, seasonal labor.
Autonomous mobile robots help improve warehouse safety. According to the Occupational Safety and Health Administration, more than 11 percent of forklifts, which are driven by humans to move materials within a warehouse, will be involved in an accident. With autonomous mobile robots taking on material-handling responsibilities, the amount of forklift accidents can be reduced.
Autonomous mobile robots reduce human error. Because autonomous mobile robots are not operated by humans, the human error element related to workplace accidents is eliminated. Instead, these robots leverage advanced vision systems and sensors to sense their environments and respond to changes in real time. Plus, they are built under strict safety guidelines and designed specifically with safety in mind.
Autonomous mobile robots support digital transformations. Many, if not most, organizations are engaged in some degree of digital transformation or modernization efforts. Autonomous mobile robots can provide a mechanism for warehouse managers to autonomously capture data about the movement of materials and inventory utilization. In addition, the option of integrating autonomous mobile robotics technology with operations-level systems, such as warehouse management and warehouse execution systems, can support the alignment between the physical execution of tasks and the digital footprint of the operation.
Autonomous mobile robots can be implemented without disrupting operations. Many of today’s leading vendors have developed highly flexible systems that can be deployed into an ongoing operation without the need to change the configuration of a facility or engage in infrastructure change. This is especially important for smaller, regional warehouses that typically cannot accommodate operations disruptions but do not have the financial capacity to invest in building out new facilities or implementing full-on automation. Autonomous mobile robots can easily be installed and deployed because they are a type of flexible automation that is not constrained by the layout of a facility, like conveyors or sortation equipment might be.

Keys to successful implementation

For organizations considering utilizing autonomous mobile robots in the warehouse, the following guidance can help to drive strategic decision-making:

Do your due diligence. Evaluate the state of the market for vendors, and work with a few candidates to understand how they perceive the value proposition, where they have deployed and what level of value has been delivered to their customers.
Consider autonomous mobile robots as a tool designed to improve the capabilities of your workers. These devices perform a task but do not necessarily do all of the things that your people can do.
Engage your workforce in the process. There is an understandable concern about the use of robots and the impact on employment. Be upfront with your workers and take their inputs during the early stages of planning.
When building out your digital transformation or modernization strategy, think about the value of data relative to the physical execution of the tasks within the warehouse operation. Craft a strategy to improve the data footprint through the use of autonomous mobile robots as a data-generation mechanism.
Start small. You can start with this technology on a small scale and build from an initial deployment, implementing autonomous mobile robots where it makes the most sense.
In addition, you can choose a robot-as-a-service model that reduces the risk associated with using the technology and also improves your ability to dynamically scale your fleet.
Do not let preconceived notions about the complexity of the technology get in the way of taking action. Overall, this technology is exceptionally user friendly.

Play to Their Strengths

Tue, 04 Feb 2020 00:00:00 -0600

Editor’s Note: We are pleased to welcome Janet Duckham, chief supply chain officer at Captain D’s, to the pages of SCM Now magazine. Duckham leads the company’s purchasing efforts, oversees quality assurance, and manages distribution and logistics processes for 540 restaurants in 22 states.

As executives, we all rely on others to make positive contributions to the organization. However, sometimes people fall short. As leaders, it may be tempting to just say, “Well, they can’t do it,” or “They don’t get it.” Instead, I suggest looking in the mirror and asking, “How can I foster an environment in which this person can excel?”

I’m of the opinion that 99% of people want to do a good job. Some of them just need help unlocking their potential. Creating clear expectations, establishing accountability and providing constructive feedback is a three-step process that can be applied to all aspects of people development.

Start with Expectations

The first step is simply asking each person on your team if they know what they are supposed to do. Find out if they understand what specific contributions they are expected to make and how they will be evaluated. This provides insight into how they see their impacts and value to the organization. Many times, there is a disconnect between what your expectations are and what they think your expectations are.

I grew up playing sports and have applied many of my experiences to what happens every day at work. Whether an individual or team sport, there are situations that build commitment and character. On a team, typically each player has a specific responsibility: For example, a point guard is the floor general and runs the team on the court. We would not expect the center to be handling those responsibilities, as that is not the expectation of that role.

Accountability is the strength of discipline

Lack of accountability leads to mediocrity, which is unacceptable. Accountability starts with setting goals. Goals, in turn, bring about a proactive focus. Set goals with your team members’ involvement, as people are more invested when they are part of the process. There are numerous ways to do this, but the SMART method works and is easy to execute. SMART goals are specific, measurable, achievable, relevant and timely.

Explain how goals can be achieved using an action plan or roadmap. Develop a scorecard and establish performance indicators that will be used to measure the results. Finally, remember that everyone works differently, so let go of how you would reach the end result. You may even learn something from watching a new approach.

The importance of feedback

Giving feedback is all about creating self-awareness. If team members are under-performing, managers must confront the problem by providing timely and constructive feedback. This also helps motivate employees to go beyond mere compliance (“I have to do this”) to true commitment (“I want to do this, and I care about the results”). Commitment is a key building block of an engaged culture.

According to “Bringing out the Best in Others” by Thomas K. Connellan, there are three types of feedback: motivational, informational and developmental. Motivational feedback focuses on behavior and is intended to accelerate someone’s potential. To reinforce the behavior you want more of, compliment it. This kind of positive recognition builds self-esteem and leads to greater results. To correct the wrong behavior, use negative feedback. This is not a punishment. Simply deliver the message — hard on the process, soft on the person. Remember, providing no feedback at all is worse. It can be a silent assassin. Finally, be specific. Asking, “How is my team doing?” is less valuable than, “Is my team getting you what you need within two hours?”

Informational feedback is the roadmap to success and therefore must be goals-focused. The most effective informational feedback is immediate and matches the behavior. Again, the assumption is that people want to do a good job. Hence, highlighting the results of their efforts has a high probability of improving future performance.

Developmental feedback is a method for making corrections. First, define the issue and describe performance. Avoid pointing out problems or asking why they happened. Instead, inquire as to how things can be improved and what is needed to make those improvements. As your team members come up with solutions, they will buy in.

Unlock the potential in your team by keeping these strategies in mind. When you spend more time on what is right, you will bring out the best in others.

Coronavirus Outbreak Amplifies Pharmaceutical Supply Chain Risk

Fri, 31 Jan 2020 00:00:00 -0600

The number of reported Coronavirus cases has surged to more than 10,000, with the death toll rising to 213. The New York Times’ Chris Buckley, chief China correspondent, reports from the epicenter of the outbreak: “It may be difficult to envisage just how thoroughly people have retreated from the streets and from public life. ... A lot of them wonder how long the shutdown can last. Even now, people are worrying about the jobs they may lose, the businesses that will close.”

Buckley goes on to say that many of those he talks with “erupt with a kind of anger and exasperation” over the fact that they had no idea how dangerous the pathogen was until their cities — including Wuhan, Shanghai, Suzhou, Huanggang and more — were literally shutting down.

As the virus extends across China and unnerves the rest of the world, pharmaceutical supply chains seem to be experiencing the greatest impact. According to the FDA, China has 15% of the world’s facilities manufacturing active pharmaceutical ingredients for 370 essential drugs.

Michael Osterholm, director of the Center for Infectious Disease Research at the University of Minnesota, delivered a stern warning to health care and pharmaceutical supply chain organizations on CNBC’s The Exchange: “Many of the critical products we use every day, such as medicines and medical devices, are actually manufactured in China’s areas being shut down. … Every company that has any manufacturing capacity in China right now better be looking very carefully at their supply chains.”

Osterholm emphasized that the outbreak is going to have an impact on the global supply of critical products “within days to weeks.”

Rosemary Gibson, a health care and patient safety expert at bioethics nonprofit The Hastings Center, says reliance on ingredients from China is worrisome. In her book, China Rx: Exposing the Risks of America’s Dependence on China for Medicine, she writes: “All it takes is for one ingredient plant to cause a problem in the near term. The production of some medicines depends on one supplier. This is why long supply chains for critical products should be rethought. … If you have a supply chain concentrated in a single country, no matter what country it is, that’s a risk of epic proportions.”

A wide range of risks

Reginaldo Montague, CFPIM, CSCP, writes in SCM Now magazine: “The pharmaceutical supply chain stretches around the world like a rubber band wrapped around a ball. The smallest fault in any segment of that rubber band challenges the integrity of the whole and could lead to catastrophic failure of the entire system.”

He explains that, not long ago, the drug supply chain was more localized and therefore far less complex. However, now that active ingredients are sourced from multiple global organizations, the pharmaceutical supply chain contains a wide range of risk profiles.

ASCM’s Risk Management Certificate is a comprehensive, forward-looking program that will enable you develop a powerful supply chain risk mitigation strategy for your business. The education explores how to effectively assess risk, explains governance and compliance, provides an enterprise risk management framework, defines proper organizational structures, and much more.

Take the first step toward earning your certificate and mastering supply chain risk management today.

How Industrial Real Estate Owners Can Meet Evolving E-Commerce Needs

Fri, 31 Jan 2020 00:00:00 -0600

Now that we are in the midst of the Fourth Industrial Revolution, the world is changing rapidly in the face of exponential innovation that will permeate every facet of life. The way we do business and interact with each other is undergoing a shift not seen since the first Industrial Revolution. New technologies — such as the internet of things, artificial intelligence and robots — are changing the way companies operate. At the same time, consumer expectations for customized products, product transparency and fast delivery are putting increased pressures on supply networks.

This shifting ecosystem is forcing a strategic shift in how companies operate and is challenging historically successful network distribution footprints. Traditional logistics networks have long relied on large industrial warehouses, strategically placed using advanced linear programming models to balance service levels in key markets with an optimized total cost to serve. This hub-and-spoke model still is widely used today.

New research from our colleagues at the Deloitte Center for Financial Services is providing a good picture of the immediate future for industrial real estate. The team forecasts that double-digit e-commerce sales growth will drive approximately 850 million square feet of industrial real estate demand between 2019 and 2023. However, industrial real estate’s pace of growth is forecasted to slow to nearly half of 2018 levels. Although the need for these large distribution centers remains, where they are located, how they operate within their four walls and the role they play in the broader digital supply network are changing.

The takeaway is that industrial real estate property owners should focus on innovation, such as creating more efficient, accessible and smart spaces, and on securing warehouses close to population hubs. Tenants and consumers alike want technologically advanced warehouse facilities in locations that enable same-day and next-day delivery.

From there, the requirements for how a supply network needs to operate can be fundamentally altered through investment in advanced warehouse management; transportation execution solutions; and a workforce that can be digitally augmented, such as by using robots to assist with outgoing deliveries and returns processing. In certain industries, the concept of black-out warehouses — meaning that the facility’s workforce is all robots, which do not need lights or other utilities — are in full operation. Finally, predictive analytics capabilities can improve sales forecast accuracy, customer profiling, ensemble modeling and future demand scenarios.

The world of commerce is changing rapidly to meet the new frontier enabled by disruptive and digital technologies, fueling growth and investment in the digital supply networks of the future. This means that, instead of being part of static and linear supply chains, companies will participate in interconnected ecosystems of nodes that can dynamically shape the planning, production and distribution of products. Looking ahead, producers, suppliers, industrial real estate owners, logistics service providers and operators all need to evolve to be more agile to keep up with the rapidly changing business environment.

Easy Inventory Management Tweaks That Will Impress Your Boss

Wed, 29 Jan 2020 00:00:00 -0600

If your boss is like most, they are probably impressed by measurable results, such as the dollar value of cost cuts and percentage increases in efficiency. When managing indirect inventory in a manufacturing facility, though, it can sometimes seem that significant, measurable changes require a major effort, such as months of meetings seemingly involving everyone from the security guard to the chief financial officer and an elaborate rollout plan.

You probably don’t have the time for that. But there are a few quick and simple adjustments you can make that will lower costs and improve efficiency:

Segment your inventory. The vast majority of your indirect supplies can be categorized into one of four buckets, based on their cost and usage, namely

high-cost and high-use inventory
low-cost and high-use inventory
low-cost and low-use inventory
spot buys.

Managing all of these buckets of inventory the same way is a recipe for excess costs. Instead, think strategically about how best to manage each category.

For high-cost, high-use items, maintain strong controls. This means ensuring that you keep enough of these items in stock but also preventing unnecessary usage or early reorders.

You shouldn’t spend a lot of time managing low-cost, high-use items. As much as possible, make these items available when and where needed to keep production moving.

Low-cost, low-use items are susceptible to being over-inventoried. Maintain minimal inventory levels and reorder only when needed to avoid overspending.

Spot buys cover items that you don’t keep in inventory. For these orders, you need an efficient process and reliable supplier with the maintenance, repair and overhaul supplies that you need when you need them.

Balance centralized inventory with point-of-use storage.

With your inventory properly segmented, you can look at where things should be stored and managed. Many facilities store everything in a central crib, but there’s a problem with this. Workers often end up taking more of the frequently used items than they actually need in order to avoid time-wasting trips. This means employees are hoarding inventory, which can distort records and require frequent reordering. Imagine you have just five operators hoarding three weeks of inventory. Pretty soon, you’ll be ordering too much, spending more than you have to and wondering why.

Consider managing high-cost, high-use items with a vending machine near operators’ work stations. This makes the items easily accessible while maintaining accurate inventory records and accountable usage allocation control.

It may not be worthwhile to store low-cost indirect inventory in a centralized crib because of the associated inefficiency and cost. Instead, making these items easily available in a convenient location — or multiple locations — may be more efficient.

Secure the crib. When numerous employees need inventory from a crib, it is tempting to make the crib semi-secure and rely on associates to fill out inventory forms and keep records updated. But more often than not, workers going to that crib are focused on getting what they need and getting back to work. Soon, a wide discrepancy between what’s in the crib and what inventory records show develops.

Inaccurate records create other problems. Inventory may run out and be unavailable when needed, even though the business system shows it to be on hand. This can cause production slowdowns. Associates may stop relying on what’s in the crib, hoarding extra inventory at their work stations because they can’t be confident they’ll find what they need. Again, this can spur early reorders and create excess inventory levels.

Fully secure the crib, by tracking inventory with automated tools, to optimize inventory levels and better manage costs. What does a fully automated, secure inventory crib look like? Here’s an example: When an operator or maintenance worker needs something from the crib, they request the item from the crib manager. The crib manager removes the item from stock; scans the bar code to automatically update inventory levels; and then either gives it to the worker or, in some circumstances, delivers it to the appropriate workstation. The technology and extra labor have a cost, of course. But in the long run, such systems save much more money, creating a net gain for the facility.

Control your indirect costs using these three easy tweaks. Your boss will surely like the measurable results.

What Can Machine Learning Do for Your Supply Chain?

Tue, 28 Jan 2020 00:00:00 -0600

With all the fanfare surrounding machine learning, people are often surprised to learn that it has been around since 1959. This was when Arthur Samuel, a gaming and artificial intelligence (AI) engineer working for IBM, coined the term to describe the concept behind his revolutionary invention: a self-learning, checkers-playing program. Machine learning is a type of AI that enables computers to become smarter by performing tasks without any explicit programming.

The machine learning golden era is here, with affordable processing power, in-memory storage and an abundance of data driving mainstream adoption. The most important factor behind this machine learning revolution may be the unassailable business need. In the world of supply chain, escalating supply, distribution, sales channels and demand complexity make it increasingly difficult to plan accurately. Meanwhile, industry professionals are grappling with relatively new phenomena that create variability, including fast fashion and other types of hyper-seasonality, shorter product introduction cycles and the impact of social media. And wildcards such as extreme weather, stock market fluctuations and socioeconomic volatility add to the difficulties. Machine learning augmentation is ideal for alleviating the headaches associated with many key processes.

Six strategies for success

Following are six ways supply chain professionals can ensure machine learning drives desired business benefits.

Set clear objectives at the outset. When you learn about other companies’ success stories (see sidebar), it’s tempting to want to just dive in. However, the scientific and iterative nature of machine learning calls for it to be implemented methodically. Create a clear charter of what you want to accomplish and why. This should include establishing baseline metrics so you can track how your machine learning application is performing.

Gather the necessary data to accurately compare previous results to those enhanced by machine learning. This is the best way to gain confidence in your initiative. And because machine learning systems get smarter over time, having a consistent measurement method is essential to tracking return on investment and outcomes. Consider making this a part of your sales and operations planning (S&OP) effort.
Embrace probability forecasting. After you’ve established project objectives, it’s time to build a solid foundation for a successful and sustainable initiative. Probability forecasting is most compatible with machine learning because it enables planners to forecast at the most granular level and on different time horizons. It also helps people understand the range of possibilities of demand in the forecast.

This method is ideal for supply chains that include a high number of long-tail items and face demand variability and uncertainty. Using this approach, you still get one number that’s associated with the most probable outcome. However, banded around this number is a range of other possible outcomes, each with a different probability.
Walk before you run. A phased approach helps ensure a sustainable machine learning solution that meets business objectives today and as needs change. This starts with establishing an adaptive, probability-based model for demand forecasting using existing historical data, then layering in more sophisticated machine learning using external data sources. A reliable demand forecast is critical to success with advanced machine learning and yields significant benefits on its own. Following is a typical progression of the phases a company goes through in modeling and applying data:

Phase one involves the organization building a self-adaptive model for probability forecasting, taking into account trends, seasonality, calendars and daily sales patterns. “Small data” is used to create a baseline self-learning model for probability forecasting using historical demand history.

Next, the impact of marketing activities — trade promotions, media events, product introductions and so on — is factored in. This improves the baseline probability forecast by applying machine learning technology to existing historical data.

In this external demand-sensing step, the business looks for additional correlations by introducing external and big data sources, such as weather, point-of-sale information, social media and machine-generated data.

In the final stage, specialized business knowledge is introduced from experts across sales, marketing and operations. Again, this information often emerges through the S&OP process. This is also the time to introduce external market intelligence into the model.

It can be tempting to go straight to the external demand-sensing in phase three. However, an iterative approach is the best way to determine which data is meaningful and to what degree. It also gives you the opportunity to change course based on what you learn along the way, drawing out correlations with each step.
Remember the four dimensions of data:

Data volume. Big data plays to the strengths of machine learning. It is essential to have the right amount of data to draw upon, from which the model can derive statistical significance. Don’t overlook “small data” related to historic demand.

Data granularity. Unlike approaches where data is aggregated to weed out noise, machine learning thrives on granularity, examining that noise and using it to find correlations that train the model and make it more powerful.

Data quality. As the saying goes: Garbage in, garbage out. Unfortunately, while machine learning can determine if a specific data stream has a correlative significance, it cannot tell whether that data is reliable. Therefore, machine learning projects usually include governance programs to clean, filter and maintain information quality through the data life cycle.

Data variety. The more different types of data sources you factor in, the more robust and accurate the planning outcomes can be.
Operationalize your machine learning tool. Often, businesses will build a machine learning solution to tackle a one-off business challenge without considering its long-term worth. For sustainable business value, operationalize your results.

To achieve the stability and adaptability required for operational use, use models that are self-adaptive and do not require continuous tuning by experts. Otherwise, changing business environments will make them unreliable. This is common with traditional demand planning processes that use multiple forecasting algorithms assigned to each item or location according to the demand behavior. The forecast generated by these algorithms degrades as the demand patterns evolve over time. Discrete selection and tuning of algorithms require human skills that most businesses cannot afford. One-off science projects create black boxes that only the developer can understand and support. Users remain skeptical, and, if the developer leaves the company, these models are shelved or discarded altogether. Isolated machine learning projects also require continual manual work to refresh the model when business needs change. The better method uses a self-adaptive model as part of a fully integrated solution, with frequent models updated automatically to react to changes.
Get the right people on board. Machine learning frees up planners to do more value-added, strategic work. As your business changes over time, you’ll have new questions to answer and will need to adjust your existing models so they remain accurate and useful. It’s critical to understand the needed skills and resources before kicking off the project.

Human-machine symbiosis

Part of a supply chain professional’s strategic work is applying domain proficiency. Machine learning can only do so much; business knowledge and process expertise are required to fine-tune models and maximize results. The system will get smarter over time as it factors in human input, and humans will get smarter by learning from the success rate of the probability forecasts. This enables employees to focus on service, work on strategic projects and add their business insights to the system.

Three real-world machine learning applications

Heating and cooling systems provider Lennox Industries faced the challenge of managing an ambitious North American distribution network enlargement while transitioning to a hub-and-spoke model with 55 shipping and 161 selling locations. Company leaders wanted to improve service levels and optimize inventories in order to reallocate working capital and balance inventory in the changing network. But the supply chain environment was daunting, with a multi-echelon distribution network about to grow by 250%, 450,000 stock-keeping unit (SKU) locations, many slow movers and new product introductions.

Lennox implemented a transformational supply chain planning solution to dynamically rationalize the inventory mix and design an operational plan that sets inventory stocking targets and balances service levels with inventory cost. Machine learning enabled the business to reliably model highly variable seasonal demand patterns. It sifts through hundreds of thousands of SKU locations to identify clusters of similar seasonality profiles.

This has substantially increased peak period forecast accuracy. In addition, service levels have improved by 16%, inventory turns have increased by 26%, and Lennox is now able to support a significant growth in both sales and market share.
Dairy industry supply chain planning is particularly difficult because products have short shelf lives and demand varies greatly in response to promotions. The Italian dairy producer Granarolo runs thousands of promotions annually, producing 34,000 item-promotion forecasting combinations and causing demand peaks of up to 30 times baseline sales. Its complex supply chain environment is comprised of eight production plants, six logistics technology platforms, 35 transit depots holding inventory, a large fleet of refrigerated vehicles and about 750 merchandisers servicing daily sales. A network of 100 wholesale distributors covers other local markets.

Granarolo uses advanced planning software with machine learning to optimize the demand plan for perishable products. The software also identifies exceptions and optimizes inventory and logistics to meet demand and minimize waste. Average forecast reliability has grown from 80% to 85%, peaking at 95% for fresh milk and cream and 88% for yogurt and dessert products. Inventory levels and delivery times have been halved, resulting in fresher products and less waste. And Granarolo is enjoying significantly better customer service levels and lower transportation costs.
New demands posed by a British luxury car manufacturer’s client base prompted its board to raise targets for first time availability (FTA) by 2% without increasing inventory. For the first time, the board also wanted to achieve FTA parity across all three of its car categories: heritage (pre-1997), recent production (mid ‘90s forward, but no longer in production), and current (today’s models).

The company uses advanced machine learning to analyze historical data on consumer behavior to better anticipate customer needs. The tool dips into the company’s vast store of historical data and finds eight completely new categories of behavior. The software then uses these new categories to generate a more accurate forecast. Each day, the machine learning engine tunes the safety stock for 80,000 SKUs, automatically reducing inventory before creating a replenishment plan to deliver the demanding new target service levels.

After only two months, the car manufacturer reduced the inventory value of its safety stock on the clustered items by 18% and raised FTA service levels to 97.1%. Outcomes continue trending toward significant further improvements in both service levels and reduced inventory.

Seek Out These 10 Qualities for Ongoing Career Success

Fri, 24 Jan 2020 00:00:00 -0600

Do you know which skills are most vital to your professional future? More importantly, do you possess them?

According to the new World Economic Forum (WEF) report, “The Future of Jobs,” the top 10 proficiencies and workforce strategies for 2020 and beyond are

complex problem-solving
critical thinking
creativity
people management
coordinating with others
emotional intelligence
judgement and decision-making
service orientation
negotiation
cognitive flexibility.

These findings were derived from chief human resources and strategy officers at leading global employers. The executives were asked about current shifts in business and what they mean for employment, skills and recruitment across industries and geographies.

“By 2020, the Fourth Industrial Revolution will have brought us advanced robotics and autonomous transport, artificial intelligence (AI) and machine learning, advanced materials, biotechnology and genomics,” says WEF senior writer Alex Gray. “These developments will transform the way we live and the way we work. Some jobs will disappear, others will grow, and jobs that don’t even exist today will become commonplace.”

Although AI tackles many challenges that people cannot, machines are less likely to decipher complicated puzzles that are not clearly defined or span multiple industries. This is why complex problem-solving tops the WEF list. Likewise, critical thinking is a strictly human capability that enables us to process, visualize and make connections in a world of ambiguity and nuance.

With the constant influx of new technologies, it’s no wonder that creativity is among the top three skills. “Robots may help us get to where we want to be faster, but they can’t be as creative as humans,” Gray explains, adding that negotiation and cognitive flexibility are at the bottom of the list because machines are increasingly making our decisions for us. In fact, 45% of WEF survey respondents believe AI will sit on company boards of directors by 2026.

“The future workforce will need to align its skillset to keep pace,” Gray writes. “Change won’t wait for us: Business leaders, educators and governments all need to be proactive in upskilling and retraining.”

The next five years

Something I found particularly interesting while reading the WEF report was the comparison between today’s top 10 and the list from just five years ago. While many skills were fairly comparable, others shifted dramatically (creativity). Some appeared for the first time (emotional intelligence and cognitive flexibility), and some fell off the list altogether (quality control and active listening).

Why Traceability in Manufacturing Matters More Now than Ever Before

Wed, 22 Jan 2020 00:00:00 -0600

When operating an efficient product supply chain, every component matters. The ability to track each piece from its origin at the supplier’s facility to its final delivery to customers should no longer just be a benefit or add-on service. It is a necessity. With an even greater focus on quality control and compliance across the manufacturing sector, as well as increased customer scrutiny of how raw materials are sourced and processed, traceability is more important than ever.

Because of its criticality, traceability needs to be a part of everyday operations. Companies should not only track individual components and products but also critical information such as details about suppliers and the products or inputs they provide, details about customers and the products supplied to them, the date of every transaction or delivery, the batch or serial number for each stock keeping unit, quality records for every component or batch, and the volume or quantity of every batch.

For companies that do not have dedicated traceability tools and processes in place, dealing with traceability queries can be time-consuming. In some cases, the inability to show evidence of origin or use can quickly escalate into a more pressing business issue. As such, having the ability to track components both forward and backward across the supply chain can eliminate unforeseen issues and save time and money.

Traceability also can help with inventory management and operations planning. Having the ability to trace fluctuations in raw materials, to understand when a machine part is coming to the end of its life, and to monitor the quality of parts and materials from specific suppliers will enhance every level of the supply chain. It’s safer and more efficient in the long run to make decisions based on solid facts and data as opposed to estimates.

Catering to customers

Once a product leaves a factory, traceability plays a key role in customer satisfaction. First, consumers care about product origins. They want to know where products come from, who makes them and how they are made. This is especially true in the food manufacturing sector, which has come under greater scrutiny in recent years. Being able to provide this detailed information can satisfy consumers’ curiosity and, in some cases, alleviate concerns about practices that can harm the environment or that are unethical.

In many sectors, consumers are turning toward more sustainable options as their concerns for the environment grow. Since 2016, 65% more consumers have avoided buying a product or using a service because of its environmental impact, according to the 2018 market report by Ethical Consumer.

More importantly, consumers want to know that the products they purchase and consume are safe. In the food and beverage industry, products frequently are recalled for a variety of reasons, including contamination by other foreign objects, such as metal or plastic debris from the machinery used to make, process or package the products or remnants of equipment-cleaning fluid, or foodborne bacteria. A recall event will certainly sour sales, even if just in the near-term, and likely will alter consumers’ perceptions of the brand.

However, having the proper traceability tools and protocols in place can save a company’s brand image when a recall event occurs. In fact, the benefit is at least twofold: the recall will be more targeted, which means discarding only the affected products, and consumers will be impressed, or at least calmed, but the company’s quick response to the issue.

Don’t be the kink in the supply chain

Traceability also helps with pleasing supply chain partners. Enhanced visibility enables quick turnarounds, increased attention to customer needs and competitive pricing.

Attention to product performance further down the supply chain also can help protect the reputation of all members of the supply chain. If one company institutes a cost-cutting measure or starts slacking off on quality assurance, traceability will help identify issues caused by these practices and empower supply chain players to quickly resolve the problems. Ideally, every company should ensure that it has the relevant technology and platforms in place to provide the ability to quickly recall products, track production and match replacement parts. Pair this ability with a solid crisis management contingency, and you will be prepared for all scenarios.

Make Unplanned Spend a Problem of the Past

Tue, 21 Jan 2020 00:00:00 -0600

Unplanned expenses are a fact of business. Something unexpected will happen, which results in a last-minute purchase, known as spot buying, to resolve the issue. Although some unplanned spend is acceptable — and even important — as occasional exceptions, especially when planned for in the budget, it cannot become the norm.

Spot buying is a reactive approach that usually means something has been missed or isn’t covered under a company’s procurement strategy or strategic sourcing plans. This could be attributed to changing market conditions, purchases required just to keep the wheels turning, or potentially a lack of good communication about actual requirements between the procurement team and end users. A number of organizations use spot buy catalogs to cover these requirements.

The problem with spot buying is that it is nearly always a rushed or hasty purchase. This might mean that a normally low-priced item could end up costing the company a significant amount because it is purchased on short notice and outside of negotiated bulk discount arrangements.

In some cases, in order to ensure that requirements are met, organizations issue purchasing cards (p-cards) to employees for those snap purchases. Used correctly, p-cards can enable savings, rebates and discounts as well as help pay suppliers faster, according to NAPCP, the professional association for the commercial card and payment industry.

But with spend on p-cards reaching an eye-watering $350 billion per year, according to a 2018 report from Treasury & Risk, there is a definite argument that procurement should strongly consider bringing this spend back under contract and aim for cost reduction and consolidation.

Planning for the unexpected

To convert the majority of unplanned spend to planned spend, procurement teams need to get ahead of the problem with a bit of research. Purchasers must understand what purchase categories have required unplanned spend in the past, identify repeat offenders and formalize a proactive approach to this spend that can be added to procurement’s strategic buying activities to unlock savings and reduce overall spend.

Of course, this is easier said than done, and any team attempting this task will face challenges. First, they may experience opposition from purchasing managers. Prying p-cards out of their hands will certainly be much more difficult than taking candy from a baby. But with some coaxing, a solid argument about why this needs to happen, and a change management strategy, this challenge can be surmounted.

A second challenge is obtaining good data and data analysis. Having spend analytics is one thing, but the data output is only as good as the data input. If there is resistance to change and a lack of communication from those making the unplanned spend, then no level of data analysis is going to help because the inputs will not be good enough. However, once upper-level managers have resolved this issue, the use of high-quality procurement solutions can assist with data analysis and give the company more tangible and useful information to work with.

Third, companies likely will need expert help to apply the data analytics. This is where group purchasing organizations (GPOs) can help. GPOs use their collective buying power to unlock bulk discounts for all participants. Think of it as a Groupon for businesses. Some also have experts that offer industry insights, benchmarks and analytics and can help companies identify savings opportunities, optimize product standardization and utilization, and cultivate excellent relationships with suppliers. Consider partnership with a GPO to address areas of frequent unplanned spend by instead making planned purchases through the buying community. By leveraging their collective knowledge and expertise, GPOs may be just the right resource to help take the strain off your resources.

What Young Professionals Should Know about Blockchain

Mon, 20 Jan 2020 00:00:00 -0600

In the past few years, experts have increasingly touted the benefits of blockchain in supply chain. Numerous high-profile tests have piloted the technology to support greater supply chain transparency. But is blockchain really going to be as revolutionary as experts promise? And will it affect supply chain professionals’ roles? To find out, I connected with David Bambuck Bien-Aimé, Blockchain Guru’s Montreal-area regional director, to learn more about the company’s efforts in the supply chain field. Blockchain Guru is a Calgary, Alberta-based consulting and software development firm.

Although Bien-Aimé’s background is in management, marketing and e-commerce, the company has given him opportunities to participate in several innovative projects related to big data and the digital world, as well as help Quebec-based corporations learn more about and adopt emerging blockchain technology. The company’s CEO and Chief Guru Jon Trask, CPIM, CSCP, CLTD, is a supply chain professional with more than 25 years of supply chain leadership, consulting and technology experience. This translates to the company’s “remarkable vision” for how blockchain and artificial intelligence (AI) can influence supply chains, Bien-Aimé says.

Before that vision can come to fruition, supply chain professionals need to know the blockchain basics. “Blockchain in its simplest form is a distributed ledger with high security powered by cryptography,” Bien-Aimé says. “This helps provide trust in a network with business, legal and technical capacities.” He likens blockchain to Facebook, in that they are both applications running on the internet. In addition, just as blockchain is used to facilitate secure, peer-to-peer interactions to trade cryptocurrencies, it can help create secure connections among supply chain systems and partners.

Where does blockchain fit?

Blockchain Guru is experimenting with blockchain technology and AI in a few key areas of supply chain, including forecasting, predicting estimated time of arrival, traceability, contract and quality management, contract signing, and record retention.

Bien-Aimé does not regard blockchain as a phenomenon. Rather, he says it is a tool that will be in every software engineer’s toolbox. “In five years, blockchain will be a part of every enterprise resources planning system, peer-to-peer system, transportation management system and warehouse management system,” he asserts.

As the technology evolves, it will enable capabilities that were unavailable just a few years ago. For example, it will support a new, more efficient world of collaboration between vendors and customers, with increased data sharing and fewer errors. In addition, the technology will help reduce the costs of document creation, contract management and vendor management, as well as improve traceability and delivery times.

With blockchain becoming more and more critical every day, it is important for supply chain managers — especially up-and-coming professionals — to understand the business benefits of this emerging technology. “We are entering a new era,” Bien-Aimé says. “[Think about] how we use Amazon today to buy books, clothing or accessories or how we use Google to find information or how we use wire transfers to pay bills or send funds to other people. That wasn’t the case 10 years ago. For a young professional, understanding emerging technology will be a soft skill and will add value to your pedigree.”

Eating Local, Even if You’re on the Express

Fri, 17 Jan 2020 00:00:00 -0600

While walking through a subway station, you expect to see newsstands, coffee shops, maybe a pharmacy or convenience store. Stumbling upon a farm would be, to say the least, a surprise. But that’s exactly what commuters inside Seoul’s Sangdo Station are finding. Underground along Line 7, passengers encounter a glass-walled room alive with leafy greens, herbs and edible flowers.

Kotaro Hosokawa writes for Nikkei Asian Review that the subterranean vegetable farms stem from a collaboration between Seoul Metro and agricultural startup Farm8. The goal is to boost revenue and fill vacancies in areas that are unappealing to retailers — primarily in subway stations far from the city center or outlying retail spaces.

Farm8 Assistant Manager Yeo Chan Dong emphasizes the fact that growing hydroponic vegetables under light-emitting diodes is 40 times more efficient per unit area than doing so outdoors. Plus, the hydroponic vegetables are becoming very popular among consumers — especially parents, who are wary of food grown in the open air because of South Korea’s hazardous pollution.

Notably, it’s not just farming. Adjoining these outlets are Farm8 cafes where people purchase juice and salads made from the fresh vegetables, as well as places where children can learn about agriculture. Farm8 has even started testing “smart farms,” in which artificial-intelligence-powered robots will plant, water and harvest.

Change takes root

“Without change, both organizations and individuals risk becoming irrelevant,” writes Darrin Eastes, CPIM, in the brand new issue of SCM Now magazine. He says that it’s essential for supply chain professionals to embrace transformation, challenge old norms and — as with deciding to grow salad makings in a subway station — initiate the unexpected.

In fact, this issue of SCM Now is full of stories to inspire and enable you to enact pioneering change. In the “Professional Development” department, ASCM Career Coach Rodney Apple writes: “If there is anything that is constant within the field of supply chain, it’s rapid change. Many supply chain professionals make the mistake of focusing too much time on day-to-day tasks and not enough time reading up on supply chain news or researching leading companies. Spotting and adapting to trends are powerful ways to accelerate your leadership skills.”

And “Customer Experience” department author Annette Franz offers strategies for bringing about change in your organization, including specific ways to lead by example, communicate the vision, and motivate and include others: “When people are involved in the decision-making process from the beginning, the solutions and suggestions are richer in depth and quality.”

SCM Now encompasses a world of supply chain knowledge, news, research and emerging trends. Access this key ASCM member benefit digitally; or, if you prefer reading SCM Now in print, become a print subscriber and enjoy 25% off with code SCMNOW25. Finally, our editorial team always welcomes feedback and contributions from readers. Share your thoughts and expertise at editorial@ascm.org.

Don’t Let Economic Sanctions Rattle Your Supply Chain

Tue, 14 Jan 2020 00:00:00 -0600

The U.S. Treasury Department, Office of Foreign Assets Control (OFAC), recently announced that e.l.f. Cosmetics would pay a penalty of nearly $1 million to settle potential civil liability for more than 150 U.S. sanctions violations. e.l.f.'s offense? Importing fake eyelash kits from North Korea. Fake eyelashes may not be a top national security concern, but the penalties e.l.f. is suffering are very real — even though the company believed the kits were made in China.

Last year, OFAC also reached an $8 million settlement with Zoltek Corporation, a manufacturer and retailer of carbon fiber. According to OFAC, Zoltek and its subsidiaries purchased acrylonitrile (the primary component used to make carbon fiber) from a Belarussian entity that is a specially designated national (SDN). Under OFAC rules, U.S. businesses and individuals generally cannot do business directly or indirectly with any SDN.

Given the increasingly international scope of supply chains — and the distance organizations will go to find good, affordable inputs — it is essential to understand the risks that U.S. sanctions can create. Both e.l.f. and Zoltek serve as valuable warnings of how broadly U.S. sanctions are enforced. When your company goes shopping overseas, it is critical to know your supplier and the origin of the products it sells.

Understanding U.S. sanctions

The United States was a forerunner in using economic sanctions as an alternative to military action. Even in the years preceding the Revolutionary War, the colonies sought to impose limits on purchasing and importing British goods.

In more recent times, economic sanctions have been used against a host of targets, including SDNs, governments and other entities, individuals, and even vessels. At present, the United States maintains approximately 25 different sanctions regimes. Most are administered by OFAC.

Sanctions restrict or prohibit certain conduct — and go beyond merely controlling exports and imports. In many cases, even receiving services or financial support from a sanctioned target is prohibited.

U.S. sanctions apply to U.S. citizens, lawful permanent residents or individuals protected under the Immigration and Naturalization Act; anyone in the United States, regardless of the person’s nationality; and any company or organization headquartered in the United States. In the case of Cuba and Iran, the sanctions also apply to non-U.S. subsidiaries of U.S. businesses.

Some sanctions regimes are broad, although most are selective. For example, the United States currently maintains a near absolute embargo on Iran, which means virtually all transactions are prohibited. The United States also maintains significant sanctions on Russia, but those are targeted against specific entities and individuals. As the agency with primary responsibility for administering U.S. sanctions, OFAC is authorized to deliver sanctions regulations, issue licenses (though specific licenses are not issued very commonly), provide interpretive guidance on sanctions, take enforcement action, and otherwise oversee the interpretation and application of regulations.

In addition to sanctions against countries, the United States maintains sanctions against individuals and entities engaged in specific conduct that the U.S. government considers to be a threat to national security — for example, designated narcotics traffickers; terrorists and terrorist organizations; and parties involved in weapons proliferation, human rights abuse and cybercrime. These designated entities and individuals are identified as SDNs and are listed on the List of Specially Designated Nationals and Blocked Persons.

The problem with SDNs

The SDN list is vast and includes parties that reside nearly everywhere in the world. This creates a challenge because many of them are in countries not otherwise subject to U.S. sanctions. There are SDNs in many nations with which the United States maintains good trading relations, including Canada, Mexico and the United Kingdom. Thus, managing an international supply chain means managing your suppliers, regardless of where located, against the SDN List.

Further complicating things, because of OFAC’s so-called 50% rule, the SDN list is not even a complete list of all SDNs. Under the rule, any entity that is owned 50% or more by one or more SDN is itself considered an SDN, even if not on the list.

Imagine that your organization is interested in working with the Eastern European supplier EE Co. To comply with U.S. sanctions and before engaging EE Co., you screen the company against the SDN lists. There is no match, so it appears you can do business with EE Co. But what if it turns out that 50% of EE Co. is actually owned by one or more SDNs? In addition to simply screening your potential supplier, your company should have identified EE Co.’s ownership and screened each of those parties too.

The good news is that, if you do fail to identify such a problem, the bank involved in financing the transaction will almost surely spot the existence of the SDN. Both U.S. and non-U.S. banks have been subject to huge penalties for sanctions violations over the past decade. As a result, banks are more vigilant than ever before about spotting and halting transactions with prohibited parties. There is some bad news, too: When a bank halts a transaction with an SDN, it must report the matter to OFAC. This likely will lead to OFAC asking your company for information about its business with the SDN, resulting in some major headaches.

Due diligence

It is critical to conduct meaningful due diligence into any vendor or international transaction partner. You must go beyond mere sanctions risk to consider potential risk under U.S. export law; anti-money laundering law; and, perhaps most importantly, the Foreign Corrupt Practices Act and similar anti-corruption laws.

Begin with a risk assessment to determine which transaction partners present the most sanctions risk, and determine how to allocate compliance resources accordingly. Next, a process should be developed that reflects the level of risk associated with each potential supplier. Many businesses have several tiers of due diligence. The first level might involve screening the supplier against the various prohibited parties lists, conducting a credit check, and then obtaining a written certification from the supplier that it will comply with U.S. sanctions — especially not causing your company to violate the sanctions.

Intermediate-level diligence might include the same steps as first-level diligence, as well as a review of references from the supplier or require the supplier to provide more detailed information about its operations, its history of any compliance violations and other relevant data.

The most fulsome diligence exercises might include all of the intermediate diligence steps as well as interviews with key personnel, a visit to the facility and compliance training.

Ongoing vigilance

The most effective compliance programs are rooted in a strong corporate culture. To ensure ongoing vigilance about your supplier relationships, employees need to know that your business is committed to these initiatives. Leaders must regularly convey how important compliance is to the organization. That commitment should be embodied in clear, workable policies that employees can understand and follow. An effective policy will reflect your company’s particular operations, personnel, locations and risk factors.

OFAC has published “A Framework for OFAC Compliance Commitments,” which is available on its website. The document provides a detailed summary of the five primary elements of an effective compliance program. They include

demonstration of management commitment
robust internal controls in the form of policies and procedures
routine testing and auditing of the compliance program
periodic risk assessments to evaluate new or evolving sanctions risk
compliance training.

The program also should govern personnel actions and empower them to play a leading role in day-to-day compliance. Therefore, it’s essential to have a mechanism by which employees can make good-faith reports of suspected or actual compliance violations without fear of reprisal. To that end, employees must understand how to identify potential or actual violations. Although not everyone has to be an expert on economic sanctions law and regulations, they do all need to be knowledgeable enough so that, if they encounter an unusual fact or situation, they recognize it as a potential problem and can report it.

Instruct staff members on how to look out for compliance red flags, such as if a supplier or its address is similar to that of a party found on any U.S. prohibited parties list. Other warning signs include if a supplier

is reluctant to provide information about the source of parts it uses to manufacture products
requests payment in a country outside of where it is based
primarily supplies products in a completely different business line
refuses to certify that it will comply with U.S. sanctions law.

Again, personnel do not necessarily need to know whether any of these facts, if present, mean that a violation is likely to occur. That is for your compliance team to assess. But employees should be aware enough to recognize that these situations are unusual and that transactions with an existing or potential supplier should not proceed until they have been reviewed. By implementing and abiding by a tailored, risk-based compliance program, U.S. sanctions violations can be avoided.

Perhaps most importantly, maintain records of your compliance efforts — due diligence, denied person screening, training presentations, audit reports, management communications related to compliance and so on. It is imperative to memorialize all steps taken. That way, if the worst happens, and your supplier commits a violation that could expose your company to liability, the written records become your organization’s best defense. Without them, the government will be skeptical that your business did an adequate review of the supplier before contracting with them and could claim that your company merely ducked its head in the sand about the likelihood of a violation. Unsurprisingly, the U.S. government rarely looks kindly upon an organization that willfully blinds itself to potential compliance issues.

Mattel Tones Down Supply Chain Complexity

Fri, 10 Jan 2020 00:00:00 -0600

For more than half a century, Mattel’s Hot Wheels cars have been a toy box staple. Hot Wheels were designed to look like modified hot rods or fantasy cars, often having flames painted on the sides and fantastical proportions. In addition to the toy cars themselves, the accompanying racetrack sets included connecting sections of road and ramps, as well as superchargers made from battery-powered spinning wheels to thrust the cars forward. Top speeds along these iconic bright orange ramps have been clocked at 600 scale miles per hour (just over 9 real miles per hour). This extraordinary speed was made possible by the cars’ uniquely high-quality bearings, which were actually conceived by a former Raytheon missile engineer.

Over the years, Hot Wheels have been offered in myriad shades: Spectraflame; Solid Enamel; Flying Colors, featuring flashy decals; Blister Pack; Thermal, which change color in cold water; and countless more. In fact, Mattel designers could choose from 150 different shades of red alone, with ink types ranging from glossy to waterproof.

Of course, every variation led to significant downtime at factories while equipment had to be cleaned before switching shades, as well as exponentially higher storage costs.

“Complexity is really a killer,” Mattel’s chief supply chain officer (CSCO), Roberto Isaias, says in The Wall Street Journal, explaining that his company will cut both color choices and the total number of products manufactured by about 30%. Isaias feels strongly that Mattel doesn’t need so many options and fewer shades will be hardly noticeable to consumers. “It doesn’t matter,” he told the Journal.

The toymaker also is implementing automated systems for wholesale orders and increasing minimum order quantities.

According to the article, all of these efforts are intended to simplify Mattel’s supply chain by improving, modernizing and taming “a sprawling network” that includes 13 factories, 35,000 employees during peak periods and 375,000 retail locations.

Fast-tracking careers

It’s inspiring to see more and more articles in the news these days that quote CSCOs such as Isaias. There is no doubt that organizations worldwide are recognizing the unique value of this essential role. Modern global supply chains require strategic, resourceful leaders who approach problems creatively — whether streamlining inventory complexity; eliminating shop-floor wastes, such as changeovers or turnaround time; or optimizing minimum order quantities.

ASCM was proud to hold our invitation-only, Chief Supply Chain Officer Forum again last year at our annual conference in Las Vegas. The goal of the event was to learn from one another in order to help CSCOs reduce costs and risk, drive business processes and advance supply chains. The forum followed Chatham House Rule, with no press or solicitation, to ensure that participants could share ideas and concerns openly.

In the end, the CSCOs identified three key trends: digital supply chain transformation, preparing for the next recession, and cultivating trust among customers and employees. ASCM will continue delivering valuable content on these subjects in order to help all supply chain professionals prepare for success. Look to ASCM group training, corporate seminars and the supply chain learning center, as well as our research reports and journals, blog and SCM Now magazine. These essential supply chain insights are sure to accelerate your networks and supercharge your career trajectory.

APICS Education Yields People and Process Benefits

Mon, 06 Jan 2020 00:00:00 -0600

After five years of 25 percent annual growth, Load King Manufacturing Company was feeling some growing pains. Leaders at the Jacksonville, Fla.-based full-service turnkey package provider were concerned about work quality and order commitments being compromised. They also knew that they needed to fully train and engage the more than 125 new employees.

To serve its variety of clients in the food and beverage retail space, Load King uses multiple trades, including wood, metal, solid surface, electrical and graphics production; hardwood finishing; panel lay-up; equipment consolidation; design; permitting; and construction, which creates a complicated operating environment to understand, much less lead. To get the company back on track and bring everyone up to speed, Load King executives made the decision to focus on people and processes.

Initially, a few programs were implemented to improve output and maintain the company’s high quality standards, but some team members struggled to understand program applications and processes, explains Chad Grimm, chief operations officer. Company leaders turned to APICS education to help all Load King departments understand industry terminology and speak a common language, which would, in turn, increase employees’ overall operational knowledge.

EQUALIZED LEARNING OPPORTUNITIES

Load King worked with an APICS instructor to train and educate staff members on the APICS body of knowledge. The business was committed to training all of the company’s leadership, from the shop floor team lead all the way up to the president of the company. “We had the directors and executive directors learning and intermingling with the team leads and shop floor managers,” Grimm recounts. “We were all in this together, and everybody was starting at the same level, regardless of prior experience or knowledge.”

About 50 employees participated in the initial round of APICS education. Two groups were trained on different days. This created more manageable class sizes and enabled personalized interaction between the instructor and participants. Also, to maintain company productivity, each group only participated in training once a week. Trainings were hosted on-site during the work day for added convenience. Once the class was completed, employees were given time to study for and take APICS exams.

From the first batch of students, 14 passed the Basics of Supply Chain Management (BSCM) exam, the first test toward earning the APICS Certified in Production and Inventory Management (CPIM) designation. Company leaders immediately noticed a significant improvement in interdepartmental communication and collaboration. “During meetings, various team members would reference APICS content when making a point,” Grimm explains. “When solutions to challenges were difficult to come by, pulling out APICS training material for guidance became the norm.”

Employees witnessed benefits as well. “From my perspective as a project manager, it has really helped with communication between different departments at Load King,” says Ricky Regnier, project manager II. “Whether I am discussing design and build methods with engineering or scheduling end due dates with manufacturing, being able to speak the same language and understand the unique challenges throughout the organization not only makes my job easier but also has helped me pass along the necessary information to other departments to help make their jobs easier.”

Hans Vienrich, CPIM, manufacturing engineer II, notes that his APICS education and certification have enhanced his appreciation of the importance of his role. “Understanding the interaction of [enterprise resources planning] (ERP) and [material requirements planning] (MRP) has helped me apply manufacturing strategies and decisions to operations and processes,” he says. Vienrich adds that earning APICS certification has instilled in him a sense of confidence in what he does at Load King.

After this success, the business launched a second round of training for the new CPIM Part 1 course to educate the rest of the company’s leadership. This time, 53 associates representing a cross-section of all departments, educational backgrounds and ages joined the training. Nine of the participants were individuals who passed the BSCM exam but wanted a refresher. All other participants were required to test for certification, but they were not penalized if they did not pass.

PROCESS BENEFITS

The timing of the first APICS training coincided with thee major projects at Load King. The company was in the process of implementing a new ERP system; engineering modeling software; and more than $6 million in CNC manufacturing equipment, which required new build and assembly methods. “Learning how to integrate planning, scheduling, inventory, production, shipping and more into a unified system required a deep understanding of how all the parts integrate to create the whole manufacturing and shipping process,” Grimm explains. “APICS helped with educating our team on how to bring order and properly defined organization to frequently conflicting functions and departments.”

Specifically for the ERP system implementation, APICS helped the team more accurately define the parent-component relationship with setting up bills of material (BOMs). “When setting up BOM structures, what appears to be fairly straightforward can have a significant positive or negative effect on the resulting outcome for different aspects of the company,” Grimm says.

He adds that APICS also helped assuage any change-management worries by enabling opposing sides of the discussion to understand the full relationships associated with setting up BOMs, clarifying multi-level versus single-level BOMs and purchased parts, and what the collection of accurate data could mean for analyzing performance.

Ultimately, using the APICS knowledge participants gained from training, Load King leaders were able to effectively apply sales and operations planning, master scheduling, master production and material requirements planning to more accurately differentiate the corporate and operational time frames and properly format information within the new ERP system. In the end, accurate time frames were established and job descriptions were rewritten.

STRUCTURED, SUSTAINABLE GROWTH

During APICS training and the rollout of those three major projects, Load King leaders intentionally held off new business development so that they could remain internally focused on people and processes. This, they believe, helped poise the company for its next growth strategy to diversify its customer base and double its gross revenue. “Currently, our company employs approximately 200 employees. To double the size in gross revenues requires scaling up the way our management team operates,” Grimm explains. “APICS training has opened the door for coaching our team leads, shop floor managers and even directors to grow uniformly with the company.”

Now that the company is back in growth mode, the knowledge and capabilities gained through APICS training and the technology upgrades have enabled Load King to expand its services to new markets, including hospitality, entertainment and branded retail. As the company’s business continues to increase in complexity, Load Star leaders know that it will be critical for all team members to have a strong understanding of all relevant supply chain practices. This will enable the company to continue on its trajectory of success and move more quickly than its competitors. As Grimm says, “We are relying on APICS education to continue helping us achieve this.”